New call-to-action

Businesses all over the country remained closed or operating under limited hours, and more and more businesses have discovered that their business disruption insurance claims are being denied. Their response is to sue their insurance companies. Lawmakers have also been drafting bills to force insurance companies to pay up, and the insurance companies are not happy about it. Even President Donald Trump has spoken about the issue, saying that if pandemics are not listed as an exclusion specifically, the insurance companies need to pay up.

“You have people that have never asked for business-interruption insurance and they have been paying a lot of money for a lot of years for the privilege of having it and then when they finally need it, the insurance company says ‘We’re not going to give it,’” Trump said during his briefing last Friday. “We can’t let that happen.”

If the insurance companies do not pay, many businesses will not survive the pandemic and may not be able to reopen when this is all over. Business disruption insurance is part of property insurance policies and is supposed to be triggered if something unexpected happens (usually a fire or natural disaster) and help cover the losses you will suffer while you remain closed. After a 2003 insurance case following the SARS outbreak where an insurance company had to pay a hotel chain $16 million from the losses they suffered during the outbreak, insurance companies began to exclude viruses from their policies.

“Pandemics… Are Uninsurable”

The insurance industry claims that if they are forced to pay out for all of the claims following this pandemic, they will buckle under the pressure. According to the American Property Casualty Insurance Association, the collective total for monthly insurance premiums for commercial properties totals $6 billion, but the amount of monthly income small businesses are losing is between $255 billion and $431 billion.

“Pandemic outbreaks are uninsured because they are uninsurable,” David Sampson, the CEO of the association says. He also said that the $800 billion surplus the insurance industry maintains needs to be kept stable at a time of “increased natural disasters,” instead of being used to keep thousands of businesses from going under.

Physical Damage

The insurance companies that are denying these claims are saying that the disruption insurance only applies to losses that are from physical damage to a business, like a fire. Many of the lawsuits against insurance companies are fighting back against the claim that the coronavirus does not cause property damage.

New Orleans-based lawyer John Houghtaling II is representing a restaurant in one of the first cases against insurance companies. He has said on several occasions that “The argument that the coronavirus doesn’t create a dangerous property condition is a lie. The insurance industry has a PR campaign that misrepresents the policies and what they owe, and they gaslight everyone,” Houghtaling said.

Whether or not this argument will work remains to be seen, but many business owners are hoping that this will work to get them paid what their insurance companies owe them so they survive the pandemic.

Forcing Payment is “Plainly Unconstitutional”

Part of what some states are attempting to do is to compel insurance companies to retroactively include pandemics in their business disruption insurance policies, which led to the CEO of Chubb, Evan Greenberg, to speak out against these attempts.

“You can’t just retroactively change a contract. That is plainly unconstitutional,” he said. “The industry would prevail on that and so I understand the frustration of legislators, I understand they’re looking for a remedy, but this would be a self-inflicted injury and create great uncertainty at a time when we have enough uncertainty and we’re trying to heal the economy.”



Clifford, Tyler. “Chubb CEO: Forcing Insurers to Pay Pandemic Loss Claims Is ‘Plainly Unconstitutional’.” CNBC, CNBC, 17 Apr. 2020,

Elejalde-Ruiz, Alexia. “Business Owners Bleeding Money during the Coronavirus Shutdown May Expect Insurance to Cover Their Losses. But Often They’re in for a Shock.”, 16 Apr. 2020,

Pershan, Caleb. “The Ugly Legal Battle Over Restaurant Insurance Has Begun.” Eater, Eater, 9 Apr. 2020,

Sams, Jim. “Trump Tells Insurers to Pay Virus Claims If Pandemics Not Excluded.” Insurance Journal, 14 Apr. 2020,“Will Business Disruption Insurance Cover Losses from the Coronavirus?” 

United Claims Specialists, 20 Mar. 2020,