New York State Improves Business Interruption Insurance Coverage
Effective October 27, 2024, New York State has authorized issuing stand-alone business interruption insurance as a form of basic insurance. A new Section 1113(a)(34) has been added to the New York State Insurance Law that provides:
§1113. Kinds of insurance authorized. (a) The kinds of insurance which may be authorized in this state, subject to other provisions of this chapter, and their scope, are set forth in the following paragraphs.
(34) "Business interruption insurance" means insurance against loss of use and occupancy, rents, and profits resulting from a business closure due to: (A) loss of or damage to insured or neighboring property; (B) an act or threatened act of violence while the perpetrator is on the business premises; or (C) a government order.
The new law fixes problems that dental practices and others had with existing business interruption insurance coverage during the novel coronavirus (COVID-19) pandemic. Many people had submitted insurance claims under business owners or property insurance policies, which included some form of business interruption coverage. The problem was that such coverage was conditioned upon direct physical loss or damage to property and courts across the country ruled that COVID-19 did not cause physical damage to property, thereby precluding business interruption insurance coverage. The new law makes it possible to offer business interruption insurance that is not conditioned solely upon physical loss or damage and covers business closure due to a government order. It remains to be seen if any insurers will choose to write such policies, or how they will price such coverage, but at least they now have the option of doing so.
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