To:
From:
Subject:
Please enter the text in the same order as shown in the Image below
Take Courses
Get Certified
Attend Events
Explore Resources
About

Business Interruption Insurance Claims Aren’t Paying Out During the Pandemic

August 6, 2020 Leave a comment DRI Admin

During the pandemic, many business owners thought they could count on business interruption insurance – but they were wrong. Why are so many claims being denied?

As reported by the New York Times, thousands of businesses have found out that the business interruption insurance policies they bought – to replace portions of lost revenue when a disaster forces a suspension of operations – won’t pay them during the COVID-19 pandemic.

According to these insurance companies, business interruption policies include language specifying the presence of “direct physical damage” to force a business closure. Much of this language was written in the aftermath of the SARS outbreak in 2003, specifically to exclude interruptions due to viral epidemics.

Though the insurance industry argues there’s just not enough capital to cover all coronavirus-related claims, a group of restauranteurs have joined together as the Business Interruption Group in a lawsuit, challenging the language by pointing out – in the case of New Orleans’ Oceana Grill, for instance – that COVID-19 contaminated surfaces can be difficult to clean in a hot climate, “causing real physical loss and damage.”

Beyond restaurants, minor league baseball teams are also suing their insurance companies, claiming cancellation of their season qualifies them for business interruption payments, as is the NBA’s Houston Rockets and the Toyota Center, whose lawsuit claims the loss of games and events in the arena is a form of physical damage to it.

This struggle isn’t limited to the U.S. In the United Kingdom, the Financial Conduct Authority (FCA) has warned insurance companies to assess business interruption claims “promptly and fairly,” adhering to Principle 6 of the FCA handbook, “which stipulates that firms must pay due regard to the interests of its customers and treat them fairly.” This comes on the heels of several policyholder complaints that some insurers are making deductions for some types of government support the policyholders have received during the pandemic.

Headquarters
4 Parklane Boulevard
Suite 425
Dearborn, MI 48126

London Office
Tallis House
2 Tallis Street
London, EC4Y 0AB

©2025 DRI International, Inc. All Rights Reserved.

consult-ic