The New York Department of Financial Services (DFS) took the unusual step last week of instructing all property/casualty insurers to provide information on commercial property insurance and details on business interruption coverage in light of the COVID-19 outbreak. The notice is here.
The notice recognizes that policyholders have urgent questions about the business interruption coverage under their policies. Insurers must explain to policyholders the benefits under their policies and the protections provided in connection with COVID-19.
The explanation to policyholders is to include the following relevant information.
What type of commercial property insurance or otherwise related insurance policy does
the insured hold?Does the insured's policy provide "business interruption" coverage? If so, provide the
"covered perils" under such policy. Please also indicate whether the policy contains a
requirement for "physical damage or loss" and explain whether contamination related
to a pandemic may constitute "physical damage or loss." Please describe what type of
damage or loss is sufficient for coverage under the policy.Does the insured's policy provide "civil authority" coverage? If so, please describe
what type of damage or loss is sufficient for coverage under the policy. Please also
describe any relevant limitations under the policy. Please explain whether a civil
authority prohibiting or impairing the policyholder's access to its covered property in
connection with COVID-19 is sufficient for coverage under the policy.Does the insured's policy provide "contingent business interruption" coverage? If so,
please describe what type of damage or loss is sufficient for coverage under the policy.
Please provide the "covered perils" under such policy. Please also indicate whether the
policy contains a requirement for "physical damage or loss" and explain whether
contamination related to a pandemic may constitute "physical damage or loss."Does the insured's policy provide "supply chain" coverage? If so, is such coverage
limited to named products or services from a named supplier or company? Please also
indicate whether the policy contains a requirement for "physical damage or loss" and
explain whether contamination related to a pandemic may constitute "physical damage
or loss."For each instance of coverage described above, please provide the applicable waiting
period under the insured's policy. Please also indicate whether the amount of time
coverage remains in effect once becomes active for a given incident.
We are unaware of any similar order being issued by the Hawaii Division of Insurance, but policyholder likely have concerns similar to those in New York.
