At least four states have taken measures to force insurers to cover business interruption costs caused by government-mandated shutdowns to prevent the spread of the coronavirus (COVID-19).

Insurers have insisted they are not responsible for so-called business interruption insurance, part of business owner’s policies that provides coverage for bills, lost income, and payroll in the event of a disaster. For example, in the event of a fire, a restaurant could collect on their business insurance policy’s commercial property insurance to cover the cost of replacing equipment and repairing the building. While those repairs are being done, the business interruption insurance would cover bills and payroll while the building is closed to make those physical building repairs and equipment replacements.

On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, followed two days later by President Donald Trump declaring the outbreak in the U.S. a national emergency. In the weeks that followed, local and state governments ordered shutdowns of non-essential businesses, putting millions of business owners in jeopardy of not only losing their businesses, but also laying off staff. The country’s unemployment rate has soared.

Many businesses turned to their insurance providers to honor their business interruption insurance coverage – to pay bills and cover payroll – only to find out that the one disaster the insurance companies say their policies do not cover is a pandemic.

Lawmakers in New Jersey, Ohio, Massachusetts and Pennsylvania are fighting back, introducing legislation to force insurance companies to cover these costs for businesses in their states. The National Restaurant Association is also urging state governors to help foodservice workers in part by requiring insurers to honor business interruption insurance for businesses affected by the government-mandated shutdown. Some business owners have filed their own lawsuits against their own insurance companies.

Attorneys with Beasley Allen Law Firm 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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