NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7452A
SPONSOR: Moya TITLE OF BILL: An act to amend the insurance law, in relation to
business interruption insurance
SUMMARY OF SPECIFIC 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.
PRIOR LEGISLATIVE HISTORY:
New bill.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None noted.
EFFECTIVE DATE:
Immediately.
STATE OF NEW YORK
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7452--A
Cal. No. 439
2013-2014 Regular Sessions
IN ASSEMBLY
May 17, 2013
___________
Introduced by M. of A. MOYA -- read once and referred to the Committee
on Insurance -- reported from committee, advanced to a third reading,
amended and ordered reprinted, retaining its place on the order of
third reading
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 Assem-bly, do enact as follows:
1 Section 1. The section heading of section 3426 of the insurance law,
2 as amended by chapter 235 of the laws of 1989, is amended to read as
3 follows:
4 Commercial lines insurance; cancellation and renewal provisions; busi-
5 ness interruption insurance.
6 § 2. Subsection (a) of section 3426 of the insurance law is amended by
7 adding a new paragraph 12 to read as follows:
8 (12) "Business interruption insurance" shall have the same meaning as
9 paragraph four of subsection (d) of section five thousand four hundred
10 one of this chapter.
11 § 3. Section 3426 of the insurance law is amended by adding a new
12 subsection (p) to read as follows:
13 (p) No insurer writing a policy issued or delivered in this state that
14 provides for business interruption insurance shall deny or exclude
15 coverage for a claim for loss or damage that is caused by a peril
16 insured against by the policy solely because the insured peril:
17 (1) Resulted from a peril not insured against or expressly excluded
18 under the policy; or
19 (2) Resulted from an action intended to mitigate loss from a peril not
20 insured against or expressly excluded under the policy; or
21 (3) Occurred within a reasonable amount of time either before or after
22 a peril not insured against or expressly excluded under the policy.
23 § 4. This act shall take effect immediately and shall apply to all
24 policies issued or renewed after such effective date.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD11123-02-3
