As you have undoubtedly heard, the COVID-19 pandemic caused countless businesses to turn to their insurance companies for assistance, making claims under their policies for business interruption coverage. While every insured’s policy is different, insurance companies are almost universally denying such claims. Business owners are left frustrated and wondering what exactly they have been paying for when it comes to business interruption coverage.
In denying claims, insurance companies argue that business interruption insurance is not meant to cover closures related to COVID-19. Under most policies, business interruption coverage only applies if there has been a direct physical loss of use or damage to property related to a covered loss. While many insureds argue that a virus contaminating the surface of their property is a loss of use, and thus covered, insurance companies have generally rejected such arguments, instead requiring direct physical damage.
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