With restrictions on business openings extended into August, business owners are faced with mounting bills and an uncertain future. Many were somewhat reassured at the start of the COVID-19 pandemic because they thought their business interruption insurance claims would help keep them afloat. But that reassurance has turned to dismay as insurance companies across the country are denying claims, contending that business interruption policies don’t cover shutdowns stemming from the pandemic.
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Estimates show that business continuity losses from COVID-19 for small businesses of 100 employees or fewer could amount to between $220 billion to $383 billion per month, Causey said, while the total reserve funds for all of the U.S. home, auto, and business insurers combined to pay all future losses is $800 billion.
“This type of loss could cripple the insurance industry causing many companies to fail, which would put the protection of homes, automobiles, and businesses at risk,” Causey said.
But Jay Chaudhuri, a North Carolina state senator and attorney with Cohen Milstein Sellers & Toll in Raleigh, called insurance companies’ denial of business closing claims related to the pandemic “unjust.”
“They paid premiums for insurance coverage to protect their businesses against such risks, and the denials are destroying small businesses and harming the livelihoods of employees,” Chaudhuri said. “After years of paying for business interruption insurance, small business owners need insurance companies to hold up their end of the deal.”
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