On March 10, 2020, New York State Department of Financial Services (DFS) issued a bulletin directing all authorized property and casualty companies to provide information regarding the commercial property insurance it has written in New York, details on applicable business interruption coverage, and protection afforded for business losses implicated by coronavirus (see attached PDF). To address urgent questions from policyholders about their business interruption coverage, insurers must explain policy benefits provided in connection with COVID-19. Insurers must furnish the following information to DFS by March 18, 2020:

(1) The volume of business interruption coverage, civil authority coverage, contingent business interruption coverage and supply chain coverage the insurer wrote that has not lapsed as of March 10, 2020.

(2) Explain the coverage each policy offers with respect to COVID-19 and whether there is any potential for coverage as a result of COVID-19. For each policy type (i.e., business interruption coverage, civil authority coverage, contingent business interruption coverage and supply chain coverage), insurers must send each policyholder a clear and concise explanation of benefits that is suitable for policyholder review. Insurers must send copies of all explanations to DFS and certify that benefit explanations have been provided to policyholders. Explanations to policyholders should address:

  • Whether the policy provides business interruption coverage and, if so, indicate the covered perils. Whether the policy contains a requirement for “physical damage or loss” and whether contamination related to a pandemic may constitute “physical damage or loss.”
  • Whether the policy provides civil authority coverage and what type of damage or loss is required to trigger coverage under the policy. Whether a civil authority prohibiting or impairing the policyholder’ access to its covered property in connection with COVID-19 triggers coverage under the policy.
  • Whether the policy provides contingent business interruption coverage, whether the policy contains a requirement for “physical damage or loss” and whether contamination related to a pandemic may constitute “physical damage or loss.”
  • Whether the policy provides supply chain coverage and whether such coverage is limited to specific products or services from a named supplier or company. Whether the policy contains a requirement for “physical damage or loss” and whether contamination related to a pandemic may constitute “physical damage or loss.”

We will continue to monitor and write about the rapidly evolving coronavirus situation and how it may impact our clients. For more information on this or any related insurance coverage topics, including assistance in drafting responses to the DFS, contact Verne Pedro vpedro@fullertonbeck.com at Fullerton Beck LLP.

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