The question of “does COVID constitute physical loss” has led to many discussions and over 1,500 lawsuits throughout the country. (Credit: gumpapa/stock.adobe.com) The question of “does COVID constitute physical loss” has led to many discussions and over 1,500 lawsuits throughout the country. (Credit: gumpapa/stock.adobe.com)

New Jersey Governor Phillip Murphy has signed off on a law that requires insurers to disclose whether a business interruption policy provides coverage for a pandemic.

The bill was introduced in October 2020 and passed the state senate and assembly during March.

The bill requires insurers to disclose to any potential buyer of coverage or policyholder seeking renewal of existing coverage for property damage, including business interruption about whether that coverage applies to global virus transmission or pandemic coverage. The manner of such notice is to be determined by the insurance commissioner.

Policyholders with active policies are to be notified within 30 days of the enactment of the bill by a written statement delivered via mail or electronic means whether such coverage applies or not.

Since early last year, one of the largest issues has been whether or not business interruption insurance should provide coverage for the period of time when a business was shut down to prevent the spread of COVID-19. This has led to over 1,500 lawsuits throughout the country.

Most courts have found in favor of insurers, ruling that COVID-19 does not physically damage property and that the coverage applies only when the property has been physically damaged and that damage prevents the business from operating.

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