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Aug 18
New State Law Authorizes Sale of 'Excess Business Disability Insurance'

disease-292571_640.jpgA law signed by New York Gov. Andrew Cuomo earlier this month authorizes the sale of a new type of insurance and permits licensed excess line brokers to obtain it. The coverage, called "Excess Business Disability Insurance," was authorized immediately upon the law's enactment on Aug. 2. You may want to discuss with your clients whether they need this coverage.

Senate Bill 5760A amended New York Insurance Law Section 1113(a), which lists all the types of insurance that can be sold in the state. It defines Excess Business Disability Insurance as "insurance against financial loss experienced by a corporate entity or a partnership where an individual integral to (its) successful operation ... becomes disabled due to sickness, ailment or bodily injury. " It can include:

  • Reimbursement for all overhead costs and expenses and all capital outlays of a corporate entity or partnership which it incurs in the ordinary course of business during the period of disability
  • Buy/sell arrangements in an amount sufficient to purchase the disabled individual's interest share in the corporate entity or partnership

The law does not limit the coverage to those costs.

​The coverage can be obtained in excess of a primary business-related disability policy or when a primary policy is unavailable from an admitted carrier. The law also changed the licensing law for excess line brokers to permit them to obtain the coverage from non-admitted carriers. 

This coverage would compliment key person life insurance that many organizations carry. Clients who carry that coverage may be good prospects for this new one.


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