Insurance Companies Look at Pandemic Damage, Tell Customers They're On Their Own

Chris Gaetano
Published Date:
Jun 12, 2020
Insurance companies have announced that they're not responsible for covering losses due to the pandemic, claiming that the industry does not have to pay out out hundreds of billions of dollars, said CNBC. The argument insurers are advancing is that business interruption policies apply only when actual physical property damage prevents a business from operating, and that pandemic-related losses are outside this scope, even if the business has lost significant revenue. Beyond that, there is a concern that covering pandemic losses for businesses could threaten the insurance companies' ability to remain solvent, as the trade group American Property Casualty Insurance Association estimates that it would cost the industry between $255 billion to $431 billion a month to compensate firms for income lost and expenses owed due to virus-led shutdowns.

While this stance has discouraged some business owners from making claims, it has led other business owners to seek legal counsel to test this theory. At any rate, others are sympathetic to the industry's concerns, but think that there could be a compromise reached between total denial on one end and total insolvency on the other.

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