So you thought you were covered for “business interruption” only to discover “business interruption,” in a manner of speaking, means physical damage (what?) Yes, in order to be covered for “business interruption” that interruption has to be caused by physical damage, typically fire, wind, theft or vandalism. Not surprisingly, and in an effort to both keep the economy going and find “deep pockets,” the “government” is thinking about rewriting the rules.
Currently “pending” before the New Jersey Legislature is A-3844, a bill, which if signed into law, would require insurance carriers to provide coverage for COVID-19-related business interruption claims. Interestingly, the commentary to A-3844, notes the following:
Industry sources have indicated that global virus transmission and pandemic are generally excluded from the list of covered perils under the existing standard business interruption insurance policy. The Insurance Services Office, ISO, has developed a rider to provide an insured with the option of purchasing such coverage, but to date, no states have yet approved the form. This bill, then, is intended to hold harmless a certain portion of the business sector, which had the foresight to purchase business interruption insurance, for losses sustained as a result of the current health emergency, but for which no such coverage is currently offered.
As described however, the bill would require that every insurance policy that insures against loss or damage to property and includes coverage for loss of use and occupancy and business interruption be understood to also include coverage for business interruption due to COVID-19. The legislation would limit those who are entitled to the extension of coverage to only those policies, in force on or before March 9, 2020, issued to insureds with fewer than 100 employees who work 25 hours or more in a week. In addition, the coverage only lasts for the duration of the recently declared State of Emergency, which started on March 9, 2020. The legislation would allow those insurers that do pay a claim to apply to the Department of Banking and Insurance for reimbursement. The funds to reimburse insurers would come from a fund to which all insurers are required to contribute.
In New York, no such bill is pending, but it is being thought about. See generally https://www.insurancejournal.com/news/east/2020/03/20/561801.htm. As it stands, the Department of Financial Security explains what business interruption insurance covers as:
Business interruption coverage typically can only be triggered if you have property loss that leads to the business interruption. One example could be that a fire in your office has caused you to suspend your business activities. NY: https://www.dfs.ny.gov/consumers/coronavirus/business_interruption_insurance_faqs
Because coverage varies across policies, you will need to read your particular policy and consult your broker or insurer or its agent (or your attorney) for more information. We leave you with the telling comment in the legislation: “The Insurance Services Office, ISO, has developed a rider to provide an insured with the option of purchasing such coverage, but to date, no states have yet approved the form.”
The McHattie Law Firm continues to follow COVID-19 developments as they impact the workplace and will provide frequent updates on those developments. For assistance addressing issues in your workplace, feel free to contact us.
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