In response to the coronavirus pandemic and its effect on businesses, the New York State Department of Financial Services (DFS) issued a letter to all authorized property and casualty insurers in the state demanding that they provide certain information regarding the commercial property policies issued in New York and provide an explanation of the business interruption coverage provided by the policies. This request, Goldberg Segalla’s Adam R. Durst explains in Law360, indicates “points of contention” likely to arise during the wave of coronavirus coverage litigation that will soon sweep the state and the nation.
“The letter applies to business owners’ policies, commercial multiple peril policies and specialized multiple peril policies, along with substantially similar insurance,” Adam writes and it identifies “specific areas of inquiry relating to business interruption, civil authority, contingent business interruption and supply chain coverages that the explanation of benefits should address.”
In his article, Adam, a member of Goldberg Segalla’s Global Insurance Services practice and its Coronavirus Coverage Team, analyzes the DFS letter and how insurers should use it to prepare for coming coverage suits.
“Under each type of coverage, it appears the DFS’ primary inquiry is whether the relevant coverage contains a requirement of physical damage or loss, and whether contamination related to a pandemic may satisfy that requirement. To be sure, this inquiry is sure to be a key issue as insurers receive claims arising from COVID-19-related losses, and the DFS is requiring insurers to lay out their position on this issue generally, without reference to the specific facts of a particular claim.”
He concludes with advice for insurers and claims handlers:
“In all, losses stemming from the COVID-19 pandemic are likely to be diverse, rendering a case-by-case inquiry essential to assessing the availability of coverage. The DFS’ request for a preemptive explanation of benefits in the absence of a claim is an endeavor insurers should not take lightly, given the coverage disputes likely to ensue.”
Goldberg Segalla is one of the premier law firms advising and representing the global insurance and reinsurance industry. Our 75-lawyer Global Insurance Services practice, which Law360 ranks among the largest in the United States, exists to serve insurers, reinsurers, and all others operating in the insurance arena.
As a law firm recognized early as an authority on the evolving coronavirus pandemic, Goldberg Segalla serves multiple leading insurers on national and regional coronavirus/COVID-19 coverage panels. Our dedicated Coronavirus Coverage Team includes many senior coverage partners across our national footprint, allowing us to coordinate and ensure consistency in our approach to coronavirus claims, while avoiding taking any position in one claim or in one jurisdiction that could disadvantage a client in another.