Why Are Insurers Denying COVID-19 Business Interruption Claims?


Many business owners choose to protect their property, employees, and profits by investing in a commercial insurance policy that includes “business interruption coverage.” Although this coverage is designed to protect owners from unforeseen, catastrophic events and shutdowns – such as those caused by the COVID-19 pandemic – many insurance companies have been denying (and even actively discouraging), business interruption claims during the COVID-19 crisis.

Aside from the obvious goal of earning greater profits and avoiding paying out claims, why have insurers decided to reject their policyholders during this difficult time for the country? More importantly, is there anything that struggling business owners can do to hold their insurance companies accountable for unfair claim denials?

How the SARS Outbreak Shaped COVID-19 Claim Responses

In 2003, the SARS coronavirus swept through over 26 countries, with symptoms and epidemiological patterns that bore a close resemblance to the current novel coronavirus. While the disease was ultimately not destructive enough to be deemed a “pandemic,” many experts at the time predicted similar economic and financial losses to the ones we’re seeing now with COVID-19. This prompted many insurance companies to change their business interruption insurance terms.

By using language that excludes losses for damage caused by viruses, bacteria, and other microorganisms, insurers hoped to avoid not only paying for SARS-related shutdowns, but also paying for any future disease outbreaks. In other cases, insurers also included restrictive language about “covered perils” to prevent policyholders from making claims for diseases and other disasters outside of the approved terms.

Am I Eligible for Business Interruption Coverage?

When you go out of your way to purchase and pay for a commercial insurance policy with business interruption coverage, you shouldn’t have to worry about unfair claim denials when your business is suddenly forced to close. Even if your policy includes a “microorganism exception” or similar language, this does not give insurers the right to reject policyholder claims without a fair investigation. In some cases, you may even be able to fight back against such terms: In several states, government officials have begun requiring insurers to pay out business interruption claims for COVID-19.

If the following apply to your business, you could be eligible to file a claim:

  • Your policy includes business interruption insurance and does not have a microorganism exclusion, or has other terms that make you eligible for coverage.
  • Your business has been economically impacted by the COVID-19 pandemic OR you were forced to shut down your business due to a local or state government mandate.
  • You can demonstrate that you suffered major financial losses and may not be able to re-open your business without coverage.

At DiPasquale Moore, we understand just how painful it can be for business owners to consider the possibility of permanent closure or bankruptcy. As skilled attorneys with decades of experience in insurance law, our Kansas City team can offer a full and comprehensive review of your insurance policy, to help provide you with a path forward out of this crisis.

Here’s what we can do for business owners across the Nation:

  • Provide a free review of your existing insurance policy
  • Take care of submitting your claim to the insurance company
  • Negotiate with the insurer on your behalf
  • Take any further legal action as appropriate

Do you need to speak with one of our team members? Contact DiPasquale Moore today at (816) 888-7500 for more information.


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