The Business Council opposes this legislation which would prohibit an insurance company that provides business interruption insurance from denying coverage for a claim when the damages, covered by the policy, are caused by a peril that is not covered by the policy. We fear this bill would greatly increase the costs of business interruption insurance and lead to less availability of this type of coverage.
This bill would effectively mandate universal coverage of business interruption insurance in all instances. This expansion of coverage will result in insurers pricing this type of coverage much higher and becoming more selective in the policies they issue. The end result would mean fewer and more expensive policies.
Business interruption insurance is a hugely important insurance for businesses that face unexpected disruptions in the operation of their business. It allows them to recoup profits that would have been earned had an emergency not occurred. This bill makes a valuable business benefit more expensive and less available. This is not the kind of message we should be sending to New York's business community.
This bill would also seek to nullify current contractual agreements. If enacted, this bill would apply to claims made on or after the effective date. Presumably, many of the claims are from policies that were created many years earlier. This would empower the state of New York to interfere and change current contracts. This is unconstitutional as established by article 1, section 10 of the U.S Constitution.
For these reasons, we urge the legislature to decline enactment of A.7452-A/S.5580-A.