1851

As the economy continues to reel from COVID-19, companies impacted by pandemic-related shutdown orders have been looking for ways to get insurers to pay business interruption claims.&nbsp;There are millions of claims by small businesses that want their insurers to cover their losses from COVID-19 lockdowns. The problem for many businesses is that they’re required to show physical loss or damages to make a claim for business interruption. Plus, even if policyholders could invoke business interruption or civil authority coverage to address mandatory shutdowns, many policies contain an exclusion for closures attributable to viruses or bacteria. Some also exclude civil actions, such as the government-mandated shutdown.&nbsp;Now, there are many state legislatures considering laws to force the industry to provide retroactive coverage to policyholders, regardless of the language of their insurance contract. In fact, at least <a href="https://www.huntonak.com/en/covid-19-tracker.html?utm_source=1851franchise.com&utm_medium=article&utm_campaign=will-business-owners-be-able-to-seek-covid-19-related-insurance-claims-2713935" target="_blank" rel="nofollow">1,000 cases are pending</a> in courts, according to one estimate.In August, Judge Stephen Bough of the Western District of Missouri <a href="https://www.insurancejournal.com/app/uploads/2020/08/studio-417-v-cincinnati-insurance.pdf?utm_source=1851franchise.com&utm_medium=article&utm_campaign=will-business-owners-be-able-to-seek-covid-19-related-insurance-claims-2713935" target="_blank" rel="nofollow">gave the go-ahead</a> to a handful of small businesses in Cincinnati to proceed with their case against property and casualty insurer Cincinnati Insurance Company over its refusal to pay business interruption insurance claims.The insurer had sought dismissal on grounds that its coverage is only for physical damage to a property, not an unseen virus outbreak. But the judge said the case should proceed to discovery because it's not clear the virus hasn't affected the businesses in a physical way.&nbsp;"Discovery will shed light on the merits of Plaintiffs' allegations, including the nature and extent of COVID-19 on their premises," he wrote. "COVID-19 allegedly attached to and deprived Plaintiffs of their property, making it 'unsafe and unusable, resulting in direct physical loss to the premises and property.'"The Cincinnati case was the first in which the judge refused to accept at face value insurers' assertion the virus doesn't qualify as physical damage to a property; in three previous cases since the pandemic hit, judges dismissed the suits.&nbsp;It is hard to say if other judges will follow Bough’s lead. <a href="http://www.pciaa.net/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=will-business-owners-be-able-to-seek-covid-19-related-insurance-claims-2713935" target="_blank" rel="nofollow">American Property Casualty Insurance Association (APCIA)</a> says business interruption insurance was never intended to cover the impact of a pandemic because a pandemic is not something that can be underwritten against. Many commercial insurers worry that if they’re forced under proposed state laws to liquidate those reserves to pay policyholders for virus-related losses, insurers won’t be able to pay other legitimate claims and it could bankrupt the insurance industry.John Houghtaling, an attorney representing several businesses in COVID-related lawsuits and the head of <a href="https://werbig.org/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=will-business-owners-be-able-to-seek-covid-19-related-insurance-claims-2713935" target="_blank" rel="nofollow">Business Interruption Group</a>, a coalition of businesses seeking relief, says insurers should pay claims if the policies don’t have these explicit exclusions.&nbsp;"We are banding together to launch big legal action in every state against insurers who deny ... coverage," <a href="https://www.cfodive.com/news/restaurants-insurers-pay-business-interruption-claims/577243/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=will-business-owners-be-able-to-seek-covid-19-related-insurance-claims-2713935" target="_blank" rel="nofollow">Houghtaling told CFODive</a>.&nbsp;Houghtaling’s coalition is also advocating for a legislative solution for insurers as well. His group wants the federal government to create a fund with which it would reimburse insurers who pay the claims even if they have an exclusion.&nbsp;The group sees that as a more appropriate solution than some others that have been floated, including one approach that would require insurers to pay regardless of whether the policy has an exclusion or not.

Will Business Owners Be Able to Seek COVID-19-Related Insurance Claims?

1851 Franchise

Restaurants and other businesses hit by pandemic shutdowns are starting to move forward on legal efforts to get insurers to pay on business interruption policies.

will-business-owners-be-able-to-seek-covid-19-related-insurance-claims

Sola Salons

Sola Salons Targets Chicago for Strategic Franchise Growth

sola-salons-targets-chicago-for-strategic-franchise-growth

Melting Pot

Photo of Melting Pot white chocolate fondue

How Melting Pot Franchisees Drive Year-Round Success Through Strategic Promotions and Local Marketing

melting-pot-franchise-year-round-success

Crust Pizza Co.

Crust Pizza Co. - Technology Piece - CTO Nick Fontenot - May 2025 - 1851 Franchise

Crust Pizza Co. Builds the Future of Franchising With Tech-First Strategy

crust-pizza-co-technology-nick-fontenot-cto

Paris Baguette

Paris Baguette’s Recipe for Expansion: Leadership, Community and A Vision for 1,000 Cafés by 2030

paris-baguettes-recipe-for-expansion-leadership-community-and-a-vision-for-1000-cafes-by-2030

Seniors Helping Seniors®

Franchisee Spotlight with Billy and Anita Clark and Seniors Helping Seniors

Heart and Purpose: Couple Launch Seniors Helping Seniors® Franchise in Northern Arizona

heart-and-purpose-couple-launch-seniors-helping-seniors-franchise-in-northern-arizona

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Resources

What ALEC-Laffer's Report Means for Franchising

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

DoorDash Expansion Could Reshape Delivery and Operations for Franchise Brands - 1851 Franchise

DoorDash Expansion Could Reshape Delivery and Operations for Franchise Brands

doordash-acquistions-deliveroo-sevenrooms

Crumbl Franchise Investment - TSG Consumer Partners -  1851 Franchise

TSG Consumer Partners Takes Minority Stake in Crumbl, Signaling Franchise Growth Potential

crumbl-franchise-investment-tsg-consumer

Yum Brands Reports Strong Q1 Results with Big Boost from Taco Bell

yum-brands-reports-strong-q1-results-with-big-boost-from-taco-bell

QSR: McDonald’s Gains Momentum With Chicken Innovation, Value Deals and Franchisee Support

mcdonalds-franchise-recovery-chicken-strategy-value-deals-2025

The Future of Franchising: Trends and Predictions for 2025 and Beyond

the-future-of-franchising-trends-and-predictions-for-2025-and-beyond

Layoffs Surge to Pandemic-Era Highs, Opening Doors for Franchise Growth

layoffs-surge-to-pandemic-era-highs-opening-doors-for-franchise-growth

Restaurant Business: Crumbl Cools Its Expansion, Refocuses on Profitability

restaurant-business-crumbl-cools-its-expansion-refocuses-on-profitability

Franchisee spotlight image with Randy and Sandy Craft, Children's Lighthouse logo on blue background

The Crafts’ Successful Journey from New Parents to Children’s Lighthouse Franchisees

the-crafts-successful-journey-from-new-parents-to-childrens-lighthouse-franchisees

Franchisee spotlight image with photo of Robert Trujillo and UWRG logo on blue background

How Robert Trujillo Expanded His Construction Business With UWRG

how-robert-trujillo-expanded-his-construction-business-with-uwrg

District Taco Franchise Costs, Fees, Profit and Data for 2025

franchise-deep-dive-district-tacos-franchise-costs-fees-profit-and-data

The Ultimate Guide to Selling Franchises: Building Your Brand’s Growth Machine

ultimate-guide-to-selling-franchises

Will Business Owners Be Able to Seek COVID-19-Related Insurance Claims?

MORE STORIES LIKE THIS