New York has joined New Jersey, Ohio and Massachusetts in attempting to mandate eradication of the “virus exclusion” in business interruption policies, causing further distress for already overextended insurers. This article is an update to our Alert of March 30, 2020. 

New York Bill A. 10226

On or about March 30, 2020, New York introduced Bill A. 10226, which would force insurers to retroactively cover business interruption claims due to COVID-19. The bill would require insurers providing business interruption and loss of use coverage to cover “business interruption during a period of a declared state emergency due to the coronavirus disease 2019 (COVID-19) pandemic.”  

The New York bill would apply to policies in force by March 7, 2020, and issued to businesses with fewer than 100 full-time employees. 

The text of A. 10226 states as follows:

Notwithstanding 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 of emergency due to the coronavirus disease 2019 (COVID-19) pandemic. 

The proposed bill would require insurers to indemnify the policyholder “subject to the limits under the policy, for any loss of business or business interruption for the duration of a period of a declared state emergency” due to the COVID-19 outbreak. Insurers that pay out business interruption claims under the proposed bill will be able to seek reimbursement from the New York Superintendent of Insurance. This would be funded by a “special purpose apportionment” the New York Superintendent of Insurance would be authorized to collect from all insurers doing business in the state.