Sonoma County businesses with pandemic-related losses hit wall with commercial insurers
Fisher had to wait until 30 days after the Kincade fire, then bought a policy from
When the
The rejection left Fisher baffled, perplexed and angry.
"There is actual physical damage to my business and equipment," he said in an interview. "The virus can sit on my equipment. It can sit on metal for three days. My scissors are metal, so that's damaging my equipment."
Fisher's frustration mirrors that of many other small business owners across the
Some area small businesses are fighting back, though. Most notably, famed chef
Keller's attorney,
The latest anguish over insurance coverage during a crisis is all too familiar for many
"They (2017 fire victims) had a full coverage problem," said
Only a third of
The decision by a business owner to pursue legal action against a commercial insurer over this matter likely comes down to whether a business interruption policy includes a specific exclusion for virus- related losses. Typically, these commercial polices will have standard language stating that the suspension of business operations must be caused by direct physical loss of or damage to property -- which is what insurers are saying isn't present with the coronavirus pandemic. Attorneys tend to be reluctant to take a case for a business if the interruption policy has such a virus exclusion, Bach said.
Most commercial insurers started including that exclusion in their business interruption policies after the luxury hotelier
"There is no ambiguity in the language at all. None," he said of typical business interruption insurance policies.
Hartwig went on about pandemic-related business losses: "Insurers have never collected a premium for this type of loss."
Still, there are attempts to challenge that stance. Keller is asking a
Keller's lawyer, Houghtaling, said such language gives his client an advantage.
"To avoid payments for a civil authority shutdown, the insurance industry is pushing out deceptive propaganda that the virus does not cause a dangerous condition to property," he said. "This is a lie, it's untrue factually and legally."
Many local business owners interviewed for this story say they have not gotten their hopes up to recover any lost money through their business interruption coverage.
Others are more hopeful, especially those businesses with more legal resources.
The donnybrook has caught the eyes of state and federal elected leaders. As of
To better inform policymakers, Lara on
Lara can order an insurance company to cover business losses caused by COVID-19, if the specific policy includes such coverage and the loss is not otherwise excluded, the insurance commissioner's spokesman said.
In a statement, Lara said his department is working with insurers and business owners "to find creative solutions during this unprecedented crisis to make sure our businesses survive."
Against this political backdrop, the insurance industry has made another argument: its financial viability would be at risk if insurers were forced to pay coronavirus-related business claims. In tandem, the insurers are making the argument the federal government already has stepped in to provide some relief small businesses are seeking, specifically the stimulus package passed last week by
"The federal government has more policy tools and levers that it can adjust and it can use in a very targeted manner," said Hartwig, university professor and commercial insurance expert.
"Any attempt to retroactively collect for nonexisting coverages for such an extraordinary catastrophe like the COVID-19 would absolutely put into question the industry's vitality and potentially solvency," said
That answer is cold comfort to
His livelihood is now in jeopardy since he can't do home visits to cut hair. And even if he sold gift cards or vouchers for future service, Fisher said he likely would be digging himself into a financial hole he could not climb out of when he eventually reopens. He is set to pursue a legal claim against his insurer, Hiscox.
"I'm not letting go," he said. "We went to bed thinking we were covered, and we were great, and we were golden because our insurance companies sold us these policies."
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