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Why are business owners being denied “business interruption” insurance due to Covid 19?

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    NEW ORLEANS, LA (WGNO) — Food truck owner Eugene Lewis thought it made perfect sense. He would apply for the “business interruption” coverage that’s part of his insurance policy.

Lewis had been required to get that coverage in order to get a bank loan when he opened the food truck. Then, when he had to close for two months because of the government coronavirus shutdown in March and April, he was sure he’d qualify for the coverage.

Then he got the email from State Farm.

Since there was no “accidental direct physical loss” to the food truck, said State Farm, “we are unable to extend loss of income coverage at this time.”

Lewis is one of thousands of business owners nationwide who have been denied the “business interruption” coverage included in their insurance policies.

Local attorney Morris Bart represents dozens of those unhappy business owners across the state.

“It boils down to one key issue,” says Bart: “is ongoing contamination by the virus considered actual physical damage to the property, such that it triggers the insurance policy coverage?”

“The insurance companies say ‘no’,” says Bart, “but we contend that yes, ongoing contamination does trigger coverage.”

Bart points to cruise ships, which have been found to be contaminated with coronavirus on surfaces– long after the passengers have gone and the ships have been idled. That’s one type of “damage” that Bart says “can’t be litigated or controlled.”

Other examples, he says, are cases dealing with methane gas, microscopic asbestos particles, and “noxious gasses” that have been released in various businesses. Bart says that although the damage may not be visible, courts have held that business owners can claim physical damage in those cases and can file for business interruption coverage.

Bart says with so many business owners finding the same insurance roadblock, he expects the cases to be consolidated into a “multi-district litigation” in federal court.

In the meantime, Eugene Lewis’ advice to other frustrated business owners is to join the fight.

“Especially if you’ve been paying premiums for years,” says Lewis, “you should fight for it.”

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