Commissioner Lara requires insurance companies to fairly investigate all business interruption claim


LOS ANGELES, Calif. — After receiving numerous complaints from businesses, public officials, and other stakeholders of certain insurance representatives attempting to dissuade business policyholders affected by COVID-19 from filing a notice of claim under its business interruption insurance coverage or refusing to open and investigate these claims upon receipt of a notice of claim, Insurance Commissioner Ricardo Lara and the Department of Insurance issued a Notice requiring insurance companies and other Department licensees to comply with their contractual, statutory, regulatory, and other legal obligations and fairly investigate all business interruption claims caused by COVID-19.

“I want to be absolutely clear that insurance companies need to fairly investigate all business interruption claims as they would during any disaster,” said Insurance Commissioner Ricardo Lara. “Policyholders deserve all the services, coverage, and benefits they are due under their policy.”

The Notice and existing California regulations require insurance companies and other licensees to:

  • Comply with their contractual, statutory, regulatory, and other legal obligations with all California insurance claims including, but not limited to, business interruption insurance claims, event cancellation claims, and other related claims filed by California businesses.

  • Acknowledge the notice of claim immediately, but in no event more than 15 calendar days after receipt of the notice of claim.

  • Provide the policyholder with the necessary forms, instructions, and reasonable assistance, including but not limited to, specifying the information the policyholder must provide in connection with the proof of claim and begin any necessary investigation of the claim.

  • Accept or deny the claim, in whole or in part, immediately, but in no event more than 40 days after receipt of the proof of claim. The amount of the claim accepted or denied by the insurer must be clearly documented in the claim file unless the claim has been denied in its entirety.

The Department of Insurance strongly encourages businesses to review their policies, including policy exclusions, coverage limits, and applicable deductibles, and contact their insurance companies to determine what their policies cover as each insurance policy is different and the coverage varies.