The way some insurance companies are interpreting business interruption insurance is leaving small business owners in the lurch when COVID-19 forces closures. Restaurants are among the first to feel the pinch.

Community Oven in Hampton, New Hampshire, is among the nation’s restaurants that have suffered from the coronavirus (COVID-19) pandemic. When a statewide executive order banned all dine-in service at restaurants and bars to prevent the spread of the virus, owner Shane Pine lost $75,000 in sales. He contacted his insurance agency, Acadia Insurance Company, hoping to collect on the interruption clause that provides coverage for up to $10,000 in losses. He wanted to use the money to pay the employees he had to lay off. But, Acadia refused to reimburse him. The reason? No staff or customers were infected with a virus.

“The biggest disaster in the past 100 years is not part of my disaster policy?” Pine asked Acadia’s parent company WR Berkley turned down’s request for an interview.

Restauranteurs in New Hampshire – and across the country – are getting the same rejects from their insurance companies. “This has come up in the last few days,” at such a frequency, said Taylor Caswell, commissioner of the New Hampshire Department of Business and Economic Affairs, that he and representatives from nearly two dozen chambers of commerce held a conference call with the governor.

According to Eireann Sibley, communications director for the state Insurance Department, viral or bacterial outbreaks are generally excluded from business interruption clauses insurance policies, a practice that was adopted in the early 2000s following the SARS outbreak.

Meanwhile, many insurance companies are still trying to figure out whether they are obligated to reimburse for COVID-19 damage as claims calls mount. “They’ve got such a backlog. It’s the same thing with the banks,” said restaurant owner John Tinios, who is waiting to hear from his insurance company if he will be reimbursed. “The uncertainty is freaking people out.”

Beasley Allen lawyers are actively pursuing these cases already with our clients who received a denial communication from their insurance companies. Dee Miles, Head of our Consumer Fraud Section, Rachel Boyd and Paul Evans are spearheading this litigation for our firm. They would like to talk to you about any potential claims.

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