Bill Lockyer Reveals Unfair Legislative Burden Set To Hit Insurance Companies Following Coronavirus Losses

 

Attorney and former politician Bill Lockyer explores proposed legislation likely to unfairly burden California’s insurance companies with mounting COVID-19 losses.

According to Bill Lockyer, most companies carry insurance policies that take care of business interruption, protecting against the financial impact of disruptions caused by physical damage to a property. While such policies do not typically cover events such as the ongoing coronavirus pandemic, a new bill looks set to alter California legal rules in this regard, unfairly burdening insurance companies, the attorney and former politician says, following losses stemming from COVID-19.

“How does a centuries-old fundamental idea, dating back to the 1750s, relate to the coronavirus controversies of 2020?” asks Bill Lockyer of the Code of Hammurabi, speaking from his home in Long Beach, California. “It counsels keeping your word,” says the attorney and former politician.

“Unfortunately, the legislature in California is currently considering AB1552, which would reject the code’s settled principles,” reveals Bill Lockyer. The bill, he says, proposes a solution to losses suffered by restaurants and a variety of other businesses by shifting the cost of COVID-19 to property insurance policies designed to compensate, instead, for a broken water pipe, a kitchen fire, or similar.

“In an attempt to mitigate the financial impact of the ongoing pandemic, lawmakers are pressing forward,” Bill Lockyer goes on, “with legislation that essentially rewrites pre-COVID-19 insurance policies.”

Intended to provide financial relief to struggling business owners, such a change would, first and foremost, however, Bill Lockyer says, instead significantly undermine the ability of insurers to pay for claims occurring as a result of fires, for example, or from violent storms. “The bill would require insurers to cover losses that they never collected premiums for,” says the expert.

Attorney and former elected official Bill Lockyer reports that insurance companies have estimated that premiums collected in a year would likely be exhausted with just one week’s closure losses. “If enacted, AB1552 would expose insurance companies to staggering liability for claims on which policyholders simply did not purchase coverage,” adds the attorney and retired politician.

A better solution, Bill Lockyer suggests, would be a federal pandemic relief program. “This pandemic is unprecedented, and singling out insurance companies to shoulder the financial burden would not only cripple the industry,” he adds, wrapping up, “but also their fundamental ability to pay out for covered claims, such as wildfire losses, slowing down—rather than accelerating—California’s recovery.”