New Jersey Enacts New Law Requiring Business Interruption Insurers to Disclose Coverage Parameters

On May 12, 2021, New Jersey Governor Phil Murphy signed into law a bill requiring insurers issuing policies covering loss or damage to property, including the loss of use and occupancy and business interruption, to disclose to policyholders whether their policy provides coverage for “global virus transmission or pandemic.” The disclosure must be in writing and provided to the insured either through mail or email. For policies currently in effect, insurers must provide the disclosure within 30 days of the legislation’s enactment.

In addition to the coverage disclosure, insurers must provide their insureds with a general summary of common insurance clauses in policies for loss of use and occupancy and business interruption. This summary, which is to be developed by the Department of Banking and Insurance and posted on its website once available, will include examples of common definitions of business interruption coverage, typical coverage triggers and exclusions, and examples of perils that are traditionally covered. The summary may also include a disclaimer that the summary does not alter the coverage afforded by the policy and is being provided to the policyholder as guidance only.

The disclosure and summary are required by “authorized” insurers only.

The legislation can be found on the New Jersey state legislature’s website at https://www.njleg.state.nj.us/bills/BillView.asp?BillNumber=S3169.

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