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NY bill would add new class of standalone business interruption cover

NY capitol

A bill introduced Thursday in the New York Senate would amend the state’s insurance law to allow insurers to offer standalone business interruption insurance that is not tied to physical damage.

S9481 would enable businesses to purchase business interruption coverage in the event of future pandemics or other events where there is no physical damage to the property, such as an active shooter threat.

Currently, business interruption insurance covers lost revenue when a covered peril, such as fire, causes “direct physical loss of or damage to” insured property resulting in the closure of the business.

Businesses can purchase additional coverage that applies when a civil authority prohibits access to an insured’s property and the business must close because of physical damage to a neighboring property that makes it unsafe for the business to open.

COVID-19 forced numerous businesses to close without the insured property or neighboring property suffering physical damage. Businesses sought to recover their COVID-19 business interruption losses, filing thousands of lawsuits against insurers, though most rulings have sided with insurers.

S9481 would amend the insurance law to permit the coverage to be written in the excess and surplus lines market if it is unavailable from authorized insurers.

“Insurers, particularly in the excess line market, wish to write business interruption insurance that is not tied to physical damage as part of active shooter policies,” according to the bill.

The bill has been referred to the Senate Insurance Committee.