N.Y.: BI coverage expansion, causation clause reform bills pass through Legislature

June 12, 2024

Recently, the New York state Legislature has passed two significant bills poised to reshape the landscape of property/casualty insurance within the state. These legislative advancements address crucial issues in business interruption coverage and anti-concurrent causation clauses, promising to enhance protections for policyholders. 

Expansion of business interruption coverage 

The first bill (A.10342/S.9481) would expand business interruption coverage and represents a shift in how such policies are structured. Traditionally, business interruption insurance has been limited to losses stemming directly from physical damage to the insured property. However, the new legislation would broaden this scope, ensuring coverage for business interruptions caused by nonphysical events, such as pandemics or government shutdowns. shutdowns. 

This expansion is a direct response to the challenges faced by businesses during the COVID-19 pandemic. Many business owners found that their claims denied due to the absence of physical damage—leading to significant financial distress. With the passing of this bill, New York businesses would be able to look forward to more comprehensive coverage that aligns better with modern risks. 

For a detailed overview of the initial proposal and its implications, click here.  

Addressing anti-concurrent causation clauses 

The second piece of legislation (A.10343/S.9421) would focus on anti-concurrent causation clauses. These clauses have long been a point of contention between insurers and policyholders. ACC clauses allow insurers to deny claims if a covered peril occurs simultaneously with an excluded peril. This often leads to disputes and denied claims—particularly in complex loss scenarios involving multiple causes. ACC clauses allow insurers to deny claims if a covered peril occurs simultaneously with an excluded peril. This often leads to disputes and denied claims, particularly in complex loss scenarios involving multiple causes. 

The new bill would aim to mitigate these issues by prohibiting the use of ACC clauses in certain circumstances, thereby offering greater clarity and fairness to policyholders. This change ensures that when a covered event plays a significant role in a loss, policyholders can expect their claims to be honored, regardless of the presence of excluded perils. 

For more information on the specifics of the anti-concurrent causation, click here.  

Moving forward 

The fate of these bills is not yet settled. The bills will be sent to the governor for her consideration. PIANY will continue to monitor and weigh-in on these important issues on behalf of all insurance producers and their clients.  

For ongoing updates and in-depth analyses of these legislative changes, be sure to check out PIA Northeast News & Media

Bradford J. Lachut, Esq.
PIA Northeast

Bradford J. Lachut, Esq., joined PIA as government affairs counsel for the Government & Industry Affairs Department in 2012 and then, after a four-month leave, he returned to the association in 2018 as director of government & industry affairs responsible for all legal, government relations and insurance industry liaison programs for the five state associations. Prior to PIA, Brad worked as an attorney for Steven J. Baum PC, in Amherst, and as an associate attorney for the law office of James Morris in Buffalo. He also spent time serving as senior manager of government affairs as the Buffalo Niagara Partnership, a chamber of commerce serving the Buffalo, N.Y., region, his hometown. He received his juris doctorate from Buffalo Law School and his Bachelor of Science degree in Government and Politics from Utica College, Utica, N.Y. Brad is an active Mason and Shriner.

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