We've been writing about COVID-19 and its impact since early last year. One of the largest issues has been the lockdown of businesses to prevent the spread of COVID-19, and the subsequent questions as to whether or not the business's business interruption coverage should provide any coverage for the period of time when the business was shut down. This question has led to many discussions and over 1,500 lawsuits throughout the country.
Most courts have found for the insurer, 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. Since this is a reaching issue, the state of New Jersey has passed a law that requires insurers to disclose whether a business interruption policy provides coverage for a pandemic.
The bill requires the insurer to disclose to any potential buyer of coverage or policyholder seeking renewal of existing coverage for property damage that includes business interruption, to disclose 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 written statement delivered via mail or electronic means whether such coverage applies or not.
The bill, A-4805, was introduced in October of 2020, and passed both the New Jersey senate and assembly on March 25th. It was signed into law by the New Jersey Governor on May 12, 2021.
Christine G. Barlow, CPCU
Christine G. Barlow, CPCU, is Executive Editor of FC&S Expert Coverage Interpretation, a division of National Underwriter Company and Arc Network. Christine has over thirty years’ experience in the insurance industry, beginning as a claims adjuster then working as an underwriter and underwriting supervisor handling personal lines. Christine regularly presents and moderates webinars on a variety of topics and is an experienced presenter.