As outlined in our March 16 update, the New Jersey legislature was considering a bill that would require property insurers covering risks in New Jersey to pay for business interruption losses due to the coronavirus, even if their policies expressly exclude coverage for losses due to viruses or bacteria. According to the National Association of Mutual Insurance Companies (NAMIC), the Senate Majority Leader Loretta Weinberg and Assembly Speaker Craig J. Coughlin confirmed that the bill was pulled from the floor, and will be held indefinitely.
Assembly Bill 3844, in effect, would have required every property policy that provides coverage of the loss of use of property and for occupancy and business interruption to be construed to include coverage for business interruption due to COVID-19. The law would have required indemnification of insureds for any loss of business or business interruption for the duration of the state of emergency that New Jersey Gov. Phil Murphy declared on March 9, 2020, subject to the policy limits.
Concerns regarding the direct and unintended consequences of the bill, as it was drafted, were voiced by both members of the legislature, as well as the governor’s office. While the bill survived a partisan line vote in the Assembly Homeland Security and State Preparedness Committee, it never made it to the floor for further debate. It appears industry organizations such as NAMIC, the Insurance Council of New Jersey, and others, brought to the attention of legislators the bill’s intrusion into contract law, and the potential financial implications the bill would have within the state.
Notwithstanding the election to hold Bill A3844 indefinitely, legislators did voice their interest in having the insurance industry be a part of the solution to this crisis. We will continue to monitor all legislative and regulatory developments concerning the impact of COVID-19 on the insurance industry.
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