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A battle looms over ‘business interruption’ coverage, which insurers say doesn’t apply unless there is physical damage, like from a fire, unless there is specific coverage for pandemics.

One of the biggest legal fights in the history of insurance has begun.

A cavalcade of restaurateurs, retailers and others hurt by pandemic shutdowns have sued to force their insurers to cover billions in business losses. A video berating the industry ran for most of June on a giant screen in New York’s Times Square, four times each hour around the clock.

“Insurance companies: Do the right thing,” was the chorus at the end of the video. Repeating the words were a musician, a dancer, a chef, a rabbi, comedian Whoopi Goldberg—and a New Orleans plaintiffs’ lawyer, John Houghtaling II, who paid for the video.

More than half of property policies in force today specifically exclude viruses. The firms filing the lawsuits mostly hold policies without that exclusion. Their argument for getting around the physical-damage requirement is that the coronavirus sticks to surfaces and renders workplaces unsafe.

What's the Right Thing?

Logically speaking, the claimants do not have a leg to stand on. If policies specifically exclude pandemics or viruses, that should settle the matter. 

But the amounts are huge. People and corporations will sue over anything. 

How Will Sympathetic Courts Rule?

That is the key question.

And no one knows how a sympathetic court will rule. 

Unfortunately, we will likely see different answers in different states. Some of it may depend on the answer to the question: How deep are the plaintiff's pockets?

What About Riot Insurance?

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Will "riot insurance" exclusions come into play in the wake of George Floyd riots.

Of course. That will be a battle too, but a much smaller one.

Something for Nothing

The right thing is to quickly honor claims of anyone for businesses with insurance and quickly refuse claims if there is a virus or pandemic exclusion.

There may be some policies that do not fit either criteria. 

But expecting insurance companies to voluntarily pay up where there is an exclusion rider is ridiculous in these eyes.

If you want insurance to cover something, generally you have to pay for it.

Nonetheless, a monstrous legal battle has begun. And it is poised to get much worse.