New York joins New Jersey, Ohio, and Massachusetts in proposing legislation that would require property/casualty insurers to retroactively cover business interruption claims related to the COVID-19 pandemic. The bill (A. 10226) provides that:
[n]otwithstanding any provisions of law, rule or regulation to the contrary, every policy of insurance insuring against loss or damage to property, which includes the loss of use and occupancy and business interruption, shall be construed to include among the covered perils under that policy, coverage for business interruption during a period of a declared state emergency due to the coronavirus disease 2019 (COVID-19) pandemic.
It further requires that insurers indemnify their insureds for losses incurred during “the duration of a period of a declared state emergency due to the coronavirus disease 2019 (COVID-19) pandemic.” Similar to New Jersey and Ohio, the bill would only apply to policyholders with 100 or fewer “eligible employees”—i.e., full-time employees who work at least 25 hours per week. In addition, it permits an insurer who indemnifies its insured under this legislation to seek reimbursement from the superintendent of financial services, who will fund the reimbursement from amounts collected from all insurers engaged in business in New York. If enacted, the bill would be deemed to have taken effect on March 7, 2020 (the date Gov. Andrew Cuomo announced a state of emergency in New York).
Although New York is the latest, it is likely not the last state to propose legislation intended to require insurers to cover losses that would otherwise be excluded. Such bills contain a bevy of constitutional and legal issues that will most certainly be the subject of significant litigation, should they become law.
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