On September 27, 2024, Governor Kathy Hochul in New York signed a new bill into law that amends the New York Insurance Law to authorize stand-alone business interruption insurance. Under New York law currently, business interruption insurance will typically cover the loss of net profits when an event (such as a fire) results in “direct physical loss or damage” to property resulting in the closure or a reduction in business. This new law will allow for more insurance flexibility unrelated to physical damage.
Specifically, as noted in the new law’s legislative history,
“As demonstrated with the coronavirus disease 2019 ("COVID-19") pandemic, a business may be forced to close without the insured property or neighboring property suffering physical damage. Also, 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. This bill would amend Insurance Law § 1113(a) to make business interruption insurance an authorized kind of insurance that does not need to be tied to physical damage and would amend Insurance Law § 2105 to permit this insurance to be written in the excess line market if it is unavailable from authorized insurers. As a result, the bill would allow insurers to sell business interruption insurance that is not tied to physical damage, which businesses could purchase in the event of future pandemics or other events where there may not be physical damage to the property, such as an active shooter threat.”
The new law defines “business interruption insurance” as follows: "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.”
Amongst other provisions, the new law establishes minimum “initial surplus” and “minimum surplus to be maintained” requirements for mutual insurers that write business interruption insurance.
The new law takes effect on October 27, 2024.
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This Legal Briefing is intended for general informational and educational purposes only and should not be considered legal advice or counsel. The substance of this Legal Briefing is not intended to cover all legal issues or developments regarding the matter. Please consult with an attorney to ascertain how these new developments may relate to you or your business. © 2024 Law Offices of Pullano & Farrow PLLC
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