(TRENTON) – Though the COVID-19 pandemic has interrupted economic activity across the world, many business owners with business interruption (BI) insurance are being denied claims to recoup losses caused by pandemic-related closures because BI is typically only triggered when there is physical damage to a property. Some owners may be unaware their policy has specific virus-related exclusions.
With the goal for insurers to be transparent with policyholders regarding the extent of their BI coverage, legislation sponsored by Assembly Democrats Roy Freiman (D-Somerset, Mercer, Middlesex, Hunterdon), Chris Tully (D-Bergen, Passaic) and Joe Danielsen (D-Middlesex, Somerset) was approved Wednesday by the Assembly Commerce and Economic Development Committee.
The bill (A-4805) requires insurers that issue BI policies in New Jersey to provide a summary of common insurance clauses concerning coverage for the loss of use and occupancy of commercial property or business interruption to potential purchasers or policyholders seeking renewal. The summary would specifically inform policyholders that their policy may not cover pandemics or viruses. The summary would also be available on the New Jersey Department of Banking and Insurance website.
Insurers would be required to issue the summary to existing policyholders within 90 days of the bill’s enactment.
The measure’s sponsors released the following joint statement:
“It’s not unreasonable for business owners to assume their business interruption insurance would help them cover losses during the biggest interruption of business in recent memory. The pandemic has shuttered businesses for months at a time, and employers are still reeling from declining revenues and mass layoffs.
“Insurers must be up front with policyholders about their BI coverage and fully disclose how insurance can and cannot help them. This will help business owners make the best decisions for the future of their organization.”