Business interruption insurance claims to be honored under bill by Assemblymembers Ramos and Limón

AB 1552 allows the much-needed conversation between the Legislature and insurance companies during these unprecedented times.

For immediate release:

Sacramento, CA – Assembly Bill 1552 by Assemblymembers James C. Ramos (D-Highland) and Monique Limón (D-Santa Barbara) will provide financial relief to California small business owners and others who pay hundreds of billions of dollars in business interruption insurance premiums, but whose COVID-19 claim applications were denied.

“Small business owners and others have long paid costly rates to protect their restaurants, bakeries, gyms, shops and other enterprises if unexpected circumstances forced them to shut down,” Ramos said. “Some businesses are new and some are generations old, but COVID-19 threatens all their futures as they confront employee layoffs and closures. They urgently need the insurance protections for which they paid as quickly as possible. Leaving this decision to the courts will take time that businesses cannot afford if they are to survive.”

“AB 1552 allows the much-needed conversation between the Legislature and insurance companies during these unprecedented times. No one, including business owners and insurance companies, anticipated the changes we are seeing, and many of our local small businesses are struggling to make ends meet as the pandemic continues, said Limón.

AB 1552, the bill Ramos and Limón amended, would presume that COVID-19 is the cause of direct physical damage to the insured business site and would be retroactive to March 4. The proposal would take immediate effect upon approval by the Legislature and the Governor.

Business interruption insurance is optional coverage and can increase the cost of insurance premiums by $50,000 to $150,000 a year, according to one attorney seeking claim payments for his clients. The policy covers losses due to interruptions in business operations because of direct, physical loss or damage due to a disaster or harm outside the business owner’s control.

Ramos said while insurers may state they will be overwhelmed by claims, they should provide credible evidence including the estimated cost of honoring claims and insurer surpluses. “Industry representatives have said the total surplus for U.S. insurers is $800 billion,” Ramos said.

State puts insurers on notice

Ramos and Limón said insurance companies are in some instances denying claims without a fair investigation, even though insured businesses paid premiums for decades. They pointed to an April 14 notice issued by California Department of Insurance Commissioner Ricardo Lara after receiving “numerous complaints.”

In an April 14 news release that included a link to the department “Notice” on the same date, Lara publicly admonished insurers. Lara said he issued the Notice because of complaints that “certain insurers, agents, brokers, and insurance company representatives are attempting to dissuade policyholders from filing a notice of claim under its Business Interruption insurance coverage, or refusing to investigate these claims upon receipt of a notice of claim.”

Ramos said, “Assemblymember Limón and I laud the commissioner for this action, but more clarity on what constitutes a valid business interruption is needed, and that is where the Legislature must act now.”

Ramos and Limón said California’s status as the fifth largest global economy depends on the state’s four million small businesses. Ramos, a member of the Assembly’s Committee on Jobs, Economic Development, and the Economy, said businesses with fewer than 100 employees represent 97 percent of all businesses and employ almost 36 percent of all workers in the state. “We need to protect these businesses from closure, especially when in good faith they took all the steps they could to protect their bottom lines and their workforces, and in large measure, our state’s economy.”

AB 1552 is expected to be heard in the Senate Insurance Committee; no hearing date has been set. It is sponsored by the Santa Ynez Band of Chumash Indians.


Assemblymember James Ramos proudly represents the 40th Assembly district which includes Highland, Loma Linda, Mentone, Rancho Cucamonga, Redlands, and San Bernardino.

Assemblymember Monique Limón represents the 37th Assembly District, which includes Santa Barbara, Ventura, Goleta, Carpinteria, Ojai, Santa Paula, Fillmore, Buellton, Solvang, Summerland, Isla Vista, Montecito and parts of Oxnard. She currently serves as Chair of the Assembly Banking and Finance Committee.