Attention: New York Policyholders

As of 4/13/2020

Dear Policyholder,

A recent Executive Order issued by Governor Cuomo, together with recent amendments to the insurance and banking regulations (the “regulations”) issued by the New York State Department of Financial Services (“Department”), extend grace periods and give you other rights under certain property/casualty insurance policies if you are an individual or small business and can demonstrate financial hardship as a result of the novel coronavirus (“COVID-19”) pandemic (“affected policyholder”). These grace periods and rights are currently in effect but are temporary, though they may be extended further. Please check the Department’s website at https://www.dfs.ny.gov/consumers/coronavirus for updates.

If you are an individual, generally, personal lines property/casualty insurance policies are covered by these amendments, including auto, homeowners’ and renters’ insurance. If you are an individual and an affected policyholder, please contact your insurer or broker if you are uncertain whether your policy is covered.

If you are a small business, only certain types of commercial lines property/casualty insurance policies are covered by these amendments, generally including property, fire, commercial general liability, special multiperil, medical malpractice, workers’ compensation, commercial auto (including livery and other for-hire vehicles), and commercial umbrella insurance. A business qualifies as a “small business” if it is resident in New York State, is independently owned and operated, and employs 100 or fewer individuals. If you are a small business and an affected policyholder, please contact your insurer or broker if you are uncertain whether your policy is covered.

A copy of the Executive Order and regulations can be found at https://www.governor.ny.gov/news/no-20213-continuing-temporary-suspension-and-modification-laws-relating-disaster-emergency and https://www.dfs.ny.gov/system/files/documents/2020/03/re_consolidated_amend_pt_405_27a_27c_new_216_text.pdf, respectively.

Moratorium on Cancellation, Non-Renewal, and Conditional Renewal

If you are an affected policyholder, there is a moratorium on your insurer cancelling, non-renewing, or conditionally renewing your property/casualty insurance policy for a period of 60 days. If you do not make a timely premium payment and can demonstrate financial hardship as a result of the COVID-19 pandemic, your insurer may not impose any late fees relating to the premium payment or report you to a credit reporting agency or a debt collection agency regarding such premium payment.

Catching up on Overdue Insurance Payments

The regulations also require your insurer to permit you, as an affected policyholder, to pay the overdue premium over a 12-month period if you did not make a timely premium payment due to financial hardship as a result of the COVID-19 pandemic and can still demonstrate financial hardship as a result of the COVID-19 pandemic. This also applies if the insurer sent you a nonpayment cancellation notice prior to March 29, 2020.

Policies Financed by Premium Finance Agencies – Grace Period

If your insurance policy has been financed through a premium finance agency, and you, as an affected policyholder, do not make an installment payment, the premium finance agency may not cancel your policy for a period of at least 60 days, including any contractual grace period, and subject to the safety and soundness of the premium finance agency. In addition, if you do not make a timely installment payment to the premium finance agency, the premium finance agency must extend the due date for the installment payment by at least 60 days, may not impose any late fees relating to that installment payment, and may not report you to a credit reporting agency or a debt collection agency regarding that installment payment.

Catching up on Overdue Payments to Premium Finance Agencies

If you, as an affected policyholder, do not make a timely installment payment to the premium finance agency due to financial hardship as a result of the COVID-19 pandemic, the premium finance agency must permit you to pay the installment payment over a 12-month period if you can still demonstrate financial hardship as a result of the COVID-19 pandemic, subject to the safety and soundness of the premium finance agency. This also applies if the premium finance agency issued a non-payment cancellation notice prior to March 29, 2020.

How to Demonstrate Financial Hardship

If you, as an affected policyholder, are unable to make a timely premium payment due to financial hardship as a result of the COVID-19 pandemic, you may submit to your insurer or premium finance agency, as applicable, a statement that you swear or affirm in writing under penalty of perjury that you are experiencing financial hardship as a result of the COVID-19 pandemic, which the insurer or premium finance agency, as applicable, shall accept as satisfactory proof. Such statement is not required to be notarized.

Questions

If you have any questions regarding your rights under the Executive Order or regulations, please contact your insurer, broker, or premium finance agency.

Sincerely,

Rossbacher Insurance Group

This might be some additional good news for small businesses (under 100 employees) across PA regarding business interruption insurance (loss of income). Pennsylvania legislators just introduced PA House Bill 2372; which would require insurance companies to provide business interruption insurance (loss of income) during the COVID down turn. The PA bill (linked below) is similar to those introduced in New Jersey, New York Massachusetts, Louisiana, and even federal discussion; however to date, no bills have been adopted. Not sure how it will play out in the end as the COVID activities are evolving every day. We will continue to monitor the progress and keep you informed. Please note, there is no deadline for filing an insurance claim for review and we continue to recommend that at this point, your business accurately document your situation for future reference, when appropriate, but not at this time.

“…Pennsylvania legislators, House Bill 2372 would require insurers providing coverage for “loss or damage to property, which includes the loss of use and occupancy and business interruption” to include “coverage for business interruption due to global virus transmission or pandemic. Insurers would be required to indemnify policyholders subject to “the broadest or greatest limit and lowest deductible afforded to business interruption coverage under the insurance policy.”

Further, you may have heard that a number of insurance companies are offering reduced rates due to lower driving activity during the COVID closures. Travelers, Progressive, and ERIE Insurance have all taken action with beneficial rate reductions or discount credits in response to COVID. ERIE Insurance is reducing all auto rates by $200 Million! You don’t have to take any action on your policy as once approved by the insurance commissioner, these ANNUAL PREMIUM reductions will automatically apply to your renewal policy. Stay tuned for more details.

Again, there is nothing that you need to do at this point to file any insurance claim request. As discussed prior, we can adjust annual sales and payroll projections on your policy to accurately reflect your 2020 exposure. Further, we will work with you on any requested premium payment options that might be beneficial to you or your business!

We appreciate your business and value our relationship. We will always strive to work hard for you to earn your trust and confidence in Team Rossbacher! Thank you!

House Bill PDF

CARES Act w/PPP vs EIDL Loans

The recent CARES Act Program was signed into effect Friday, but we recognize the volume of information may be a bit overwhelming to consume. Given the importance of the act to you as a business owner, we wanted to share a high level overview of the pertinent points; however we, at Rossbacher, are by no means experts on this matter and simply trying to pass along valuable information.

I. Background:

On Friday, the President signed the CARES Act, the $2 trillion stimulus package Congress passed to mitigate the economic impact of the COVID-19 pandemic. In addition to providing checks to most taxpayers, the CARES Act expands the availability of small business loans under Section 7(a) of the Small Business Act. This new Paycheck Protection Program permits loans to be used for payroll costs, mortgage interest, rent, utilities, and interest on certain other debt. Up to 100% of these loans may, subject to certain restrictions, be forgiven.

II. Frequently Asked Questions:

1. Who is Eligible? Generally, any business (including 501(c)(3)s) with fewer than 500 employees is eligible for a loan under the Paycheck Protection Program.
2. What is the Maximum Amount to be Borrowed? The lesser of (A) $10 million or (B) 2.5 times the average total monthly payroll costs of the business concern.
3. Are Borrowers Required to Provide Collateral or a Personal Guarantee? No. Collateral and personal guarantee requirements are waived for Paycheck Protection Program loans.
4. What is the Interest Rate? The interest rate cannot exceed 4%.
5. How Much is Eligible for Forgiveness? Up to 100% of the Paycheck Protection Program loans may be eligible for forgiveness; however, decreases in employee headcount or wages may reduce the amount eligible for forgiveness.

III. Additional Resources:

Additional information can be found at:

1. 7(a) Loan Application Checklist
2. SBA Lender Match – https://www.sba.gov/
3. https://justworks.com/blog/cares-act-understand-your-business-options-covid-19-relief
4. https://covid19relief.sba.gov/#/
5. https://www.uschamberfoundation.org/reports/coronavirus-emergency-loans-guide-and-checklist-small-businesses-and-nonprofits

If you have any questions related to your particular situation, please contact your banker, accountant, or lawyer. This overview is just one of the resources you have at your fingertips while trying to navigate today’s environment and the changes we’re all experiencing due to COVID-19.

Additional PDF Resources: