New York lawmakers have joined lawmakers from Massachusetts, New Jersey, and Ohio in introducing a bill that would retroactively cover business interruption claims being filed due to COVID-19 regardless of the terms of the policy.

Since the introduction of COVID-19 in the United States, federal, state, and local governments have been asking individuals to shelter in place in order to curb the spread of the virus. Almost all of the 50 states have issued a state of emergency and imposed restrictions on business hours, what businesses can remain open, and the number of people allowed in a social gathering. These policies impact businesses with fewer people going out and a limitation on non-essential activities.

Standard insurance policies are not designed to cover such claims. As has been discussed in other articles posted on ICLC, there is a question as to the triggering of coverage, and many policies exclude losses due to a virus or bacteria. Despite this, the above-listed states are considering bills that would require property insurers to pay for business interruption losses due to COVID-19 even if there is an express exclusion of coverage.

New York:  A. 10226

The most recent state to consider such a bill is New York. The 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" because of the COVID-19 pandemic. The bill would apply to policies effective by March 7, when NY's state of emergency went into effect. It would only apply to policies issued to businesses with fewer than 100 full-time employees. The text indicates that insurers that pay out business interruption claims under the proposed act will be able to seek reimbursement from the New York Superintendent of Insurance. The reimbursement fund would be funded by a "special purpose apportionment" which the NY Superintendent of Insurance would be authorized to collect from all insurers doing business in New York.

Editors Note

It is likely that more states will follow suit. These potential state mandates are troubling because they will require insurers to cover damages that either do not fall under policy coverage or are explicitly excluded from coverage under the policy. These bills may not become law, but if they do litigation will almost certainly follow closely behind in order to determine the validity of those laws.

You can read the text of the other bills here:

New Jersey: Assembly Bill 3844

Massachusetts: Bill SD.2888

And you can read our coverage of those bills here.