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Business disruption insurance may not cover revenue loss from COVID-19 pandemic

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Posted at 5:48 PM, May 04, 2020
and last updated 2020-05-04 23:40:58-04

TULSA, Okla. — As COVID-19 leaves a lasting scar on many businesses forced to close shop and lose revenue, owners are turning to their insurance providers to see if a particular type of policy will cover their losses.

Business disruption insurance is used for disasters like flooding, or fires, but what about a global pandemic? As it turns out, many policy holders may be out of luck, but there are other options to recoup some cash.

Many businesses take extra precautions to prepare for the worst.

"Of course, like every business, the thing that you want to do first and foremost is you want to make sure you're covered,” said Amber Welch, owner of Amber and Marie Company.

She adds she purchased a policy to protect her stores from any kind of event forcing her to shut her doors. Part of that policy is business disruption insurance, sometimes also called interruption insurance.

“We were hoping that would take care of us during a catastrophic event or any of our business interruption,” Welch said.

As it turns out, some insurers state a global pandemic is excluded in this policy and argue that paying out claims would financially cripple providers.

"With a pandemic like this, how do you rate for something everyone in the world is being impacted by?,” Oklahoma Insurance Commissioner Glen Mulready questioned. “There is no broader group of people to spread the risk of that."

Mulready said unfortunately most business disruption policies require there be physical damage at your property.

"It's terribly upsetting when you think you have coverage for something,” Welch said. “You try your best as a business owner to plan ahead… and then to hear that claim is denied is a punch in the gut honestly."

Amber's attorney, Kevinn Matthews said they'll fight her denial. He said part of it is just asking an attorney to help reword the claim.

“The perspective I’m approaching this from is the notion of negotiating the coverage claim with the insurance company,” Matthews said.

If you can't obtain an attorney, there is help from the state. The Small Business Administration has loans available through the Cares Act, providing resources to maintain payroll, hire back employees who may have been laid off, or cover overhead

Business owners can also contact Oklahoma’s Department of Commerce, which has programs in place to help businesses move forward by providing payroll assistance and the ability to support existing jobs.

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