Photo by Jason Leung
With many governors and mayors ordering the shutdown of non-essential businesses, the restaurant and bar industries are taking a huge hit. Without a direct influx of cash or a moratorium on commercial rent, many bars and restaurants will be out of business by the time life returns to normal.
Owners with business interruption insurance are being told that insurance will not cover claims related to the coronavirus because business interruption insurance is typically tied to physical property damage. According to the insurance industry, because coronavirus does not cause any physical property damage, business interruption insurance is not triggered.
Small business owners should take proclamations by the insurance industry with a grain of salt. Remember, an insurance company’s business model is to take in premiums while not paying claims. In other words, your insurance company is not your friend when bad things happen and you have to make a claim.
At least one lawsuit has been filed by a restaurant seeking coverage under its business interruption policy. That lawsuit filed in New Orleans alleges that the coronavirus does in fact cause damage to physical property because the virus is present on physical surfaces for up to 28 days. China, Italy, France, Spain, and South Korea have taken steps to publicly clean and fumigate public areas to destroy the virus on physical surfaces. Private businesses will likely have to do the same to operate safely.
As with all insurance policies, the devil is in the details. Typical “all risk” policies cover everything that is not specifically excluded. Some exclusions specifically mention “viruses” or “bacteria”, but reading the language closely is essential. In the lawsuit filed in New Orleans, the restaurant’s insurance policy excluded pathogens in connection with terrorism or malicious use. Thus, the clear language of the policy does not cover the coronavirus, which occurred naturally.
If your business has been shut down due to coronavirus, you may be able to make an insurance claim for business interruption insurance.
Contact Klaproth Law for a free, confidential, telephone consultation. Have your insurance policy available to review.
