Interest Groups

New Jersey Assembly Passes Pandemic Business Interruption Law - Insurance Coverage

Insurance Coverage

Posted on: Jul 12, 2021

By RJ Proie, Taylor DeVore & Padgett PC

While policyholders and insurance companies continue to litigate the question of whether policies in effect during the pandemic provided business interruption coverage for business closures and income losses caused by COVID-19 and the resulting shutdowns, New Jersey is in the process of passing a law that would encourage insurers to issue endorsements that would expressly provide such coverage in the future.

The bill authorizes insurers to issue a “rider” to specifically provide coverage for global virus transmission and/or pandemic as a covered peril. Comments on the bill suggest that the Insurance Services Office has already issued suggested policy language that would meet the goal of this legislation and could be adopted by insurers. The bill passed the New Jersey Assembly on June 21, 2021, and still needs to pass the state Senate and be signed by the governor before becoming law, though it is expected to do so.

An express endorsement to provide business interruption coverage for pandemic-related losses would clear up the issue for any potential future losses. However, some have suggested that insurers could point to this bill in current litigation to bolster the argument that any policy that does not include an express endorsement to provide coverage for pandemic-related losses must not have intended to cover them.

Read the text of the bill here. Join us remotely via Zoom on Tuesday, July 13, 2021 at noon for the next Insurance Coverage Section CLE: Interplay of Insurance Coverage, Indemnification Clauses and Transfer of Risk in a Construction Context. Register now!

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