COVID-19: New York Defers Property and Casualty Insurance Premiums for Small Businesses and Consumers | Practical Law

COVID-19: New York Defers Property and Casualty Insurance Premiums for Small Businesses and Consumers | Practical Law

In response to the COVID-19 pandemic, New York has ordered property and casualty insurers to provide a 60-day grace period to small businesses and consumers financially affected by the COVID-19 pandemic to pay insurance premiums.

COVID-19: New York Defers Property and Casualty Insurance Premiums for Small Businesses and Consumers

by Practical Law Real Estate
Published on 01 Apr 2020 • New York
In response to the COVID-19 pandemic, New York has ordered property and casualty insurers to provide a 60-day grace period to small businesses and consumers financially affected by the COVID-19 pandemic to pay insurance premiums.
In response to the 2019 novel coronavirus disease (COVID-19) pandemic, the New York State Department of Financial Services (DFS) adopted emergency regulations requiring New York State regulated property and casualty insurers to allow small businesses and consumers experiencing financial hardship due to COVID-19 to defer paying premiums for 60 days. The emergency regulations follow Governor Cuomo's Executive Order No. 202.13.
The regulations do not forgive insurance premiums but provide those who are experiencing financial hardship due to the COVID-19 pandemic more time to pay their insurance premiums.
The emergency regulations specifically require property and casualty insurers to provide the following relief to small businesses and consumers who can demonstrate financial hardship due to the COVID-19 pandemic:
  • Provide a 60-day grace period for the cancellation, conditional renewal, or non-renewal of the insurance policy.
  • Allow premiums due but not paid during the 60-day period to be paid over the course of the following year in 12 equal monthly installments.
  • Waive any late payment fees, and not report late payments to credit rating agencies, during the 60-day period.
The emergency regulations also require premium finance agencies to provide the same relief to small businesses and consumers who have financed their premium payments. Premium finance agencies must provide the following relief to consumers and businesses who can demonstrate financial hardship due to COVID-19:
  • Provide a 60-day grace period for the payment of installment payments under the premium financing agreement.
  • Allow installment payments due but not paid during the applicable grace period to be paid over the course of the following year in 12 equal monthly installments.
  • Waive any late payment fees and not report late payments to credit rating agencies during the applicable grace period.
For purposes of the emergency regulations, a small business means a business that:
  • Is a resident of New York State.
  • Is independently owned and operated.
  • Employs 100 or fewer people.

Practical Implications

The evolving COVID-19 pandemic, the mandated closures or reductions of operations for businesses, and the growing number of layoffs are creating financial hardship for many small businesses and consumers. The DFS's emergency regulations provide relief and flexibility to small businesses and consumers who can demonstrate financial hardship due to the COVID-19 pandemic while keeping them insured against unanticipated risks.
To demonstrate financial hardship, small businesses should carefully document:
  • The dates when governmental orders become effective against the business.
  • All impacts of regulations and orders on the business.
  • Any loss of income as a result of the COVID-19 pandemic.
A consumer should be prepared to provide proof of a reduction or complete loss of income due to the COVID-1 pandemic.
For a collection of resources related to global coronavirus, COVID-19, pandemics, and business interruption content, see Global Coronavirus Toolkit.