What's happening
This bill prohibits insurers from denying business interruption insurance claims solely because the loss is linked to an excluded peril.
Why it matters
Prevents insurers from using “proximate cause” loopholes. The bill stops insurance companies from denying business interruption claims just because the loss is somehow linked to another event that is excluded from coverage, closing a common way insurers avoid payouts.
Expands protection for businesses facing complex disasters. If a covered loss happens in connection with an excluded event (e.g., a fire following a pandemic closure), businesses would still be eligible for coverage, helping them survive multi-faceted crises.
Covers losses from mitigation efforts. The bill explicitly includes coverage for losses caused by actions taken to mitigate damage from excluded perils, ensuring businesses aren’t penalized for trying to protect themselves.
Applies to ongoing and future claims. The new standard would apply to all claims made from the date the law takes effect, offering immediate relief to businesses with pending disputes over coverage.
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Who cares
Headline styles
Expand Business Interruption Coverage
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to insurance
- Referred to insurance
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
3499
2019-2020 Regular Sessions
IN SENATE
February 8, 2019
Introduced by Sens. BRESLIN, SEWARD -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance
AN ACT to amend the insurance law, in relation to business interruption insurance
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The section heading of section 3426 of the insurance law, as amended by chapter 235 of the laws of 1989, is amended to read as follows:
Commercial lines insurance; cancellation and renewal provisions; business interruption insurance.
§ 2. Subsection (a) of section 3426 of the insurance law is amended by adding a new paragraph 12 to read as follows:
(12) "Business interruption insurance" shall have the same meaning as paragraph four of subsection (d) of section five thousand four hundred one of this chapter.
§ 3. Section 3426 of the insurance law is amended by adding a new subsection (p) to read as follows:
(p) No insurer writing a policy issued or delivered in this state that provides for business interruption insurance shall deny or exclude coverage for a claim for loss or damage that is caused by a peril insured against by the policy solely because the insured peril:
(1) Resulted from a peril not insured against or expressly excluded under the policy; or
(2) Resulted from an action intended to mitigate loss from a peril not insured against or expressly excluded under the policy; or
(3) Occurred within a reasonable amount of time either before or after a peril not insured against or expressly excluded under the policy.
§ 4. This act shall take effect immediately and shall apply to claims made on or after such effective date.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD09758-01-9
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the insurance law, in relation to business interruption insurance
Summary of provisions
This bill would prohibit an insurance company that provides business interruption insurance from denying or excluding coverage for a claim for loss or damage that is caused by a peril insured against solely because the insured peril resulted from a peril that is not insured against or is excluded under the policy, resulted from an action that was intended to mitigate loss from a peril that is not insured against or is excluded under the policy, or occurred within a reasonable amount of time either before or after a peril that is not insured against or is excluded under the policy.
Justification
When Superstorm Sandy struck, one of the effects was a massive power outage in New York City. In the aftermath of Sandy, many business owners submitted claims under their business interruption insurance for losses caused by the outage and were surprised when the insurance company denied the claims on the grounds that their policies excluded coverage for loss or damage caused by a flood. When many of these business owners pointed out that their premises were not actually flooded and that their policies include coverage for losses caused by a power outage, the insurance companies argued that they could deny coverage because the power outage was caused by a flood. This bill would rectify this inequi- ty by prohibiting insurers from denying business interruption claims for losses that are covered under the policy because those losses were caused by something that is excluded from coverage. This will ensure that business owners are able to receive the coverage that they paid for when they purchased their policy, thereby allowing them to recover their losses and reopen for business in a timely manner.
Legislative history
S.2811 of 2017-18; S.2350 of 2015-16; S.5580 of 2013-14.
Fiscal implications
None noted.
Effective date
Immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.