Lawmakers in New Jersey, New York, Massachusetts, Ohio, Pennsylvania, and Louisiana have proposed legislation clarifying that property policies’ business interruption coverage extends to losses attributable to the coronavirus pandemic and social distancing. These bills allow policyholders to avoid costly and unnecessary disputes with their insurers over the meaning and scope of insurer-drafted insurance provisions relating to physical loss and damage requirements, and so-called “virus” exclusions.

New Jersey

The first state to take such action, New Jersey, issued bill A3844, requiring property insurers to pay COVID-19 business interruption claims. The bill’s accompanying statement explains that the proposed law is intended to hold harmless that portion of the business community that had the foresight to purchase business interruption insurance for losses sustained as a result of the current health emergency. The bill requires every presently in-force business interruption policy, insuring against loss or damage to property, be construed to cover the  perils associated with the “global virus transmission or pandemic” and “the coronavirus disease 2019 pandemic.”

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