Business owners in Hawaii are baffled by the responses they are receiving from their insurance companies regarding their COVID-19-related claims. While many businesses purchased business interruption insurance for instances such as the current crisis we are experiencing, many aren’t getting any sort of relief from their insurance companies as most are claiming that the policies they sell typically do not offer coverage for viruses, bacteria, or pandemics. As for the policies that do not specifically exclude viruses, bacteria, or pandemics, companies say coverage is only triggered by physical damage.

Although business owners argue that the COVID-19 virus has, in fact, led to their property suffering physical damage, insurance companies are refusing to cover claims. According to Steve Badger, who is a partner with the Zelle Law Firm in Dallas and represents several large insurance companies, some insurers are using a three-part analysis to decide when they should approve or deny a claim associated with the COVID-19 pandemic [Source: Honolulu Civil Beat].


What is the three-part analysis some insurers are using?


Badger says that some insurers start their analysis process by determining whether a policy contains an exclusion for virus damage, which he claims most policies have. If a policy contains an exclusion, the analysis ends there. But, if it does not exclude viruses, then the next question is “two-fold: is the COVID-19 virus present, and if so, did the virus cause tangible damage to the property?” If the answer is no, then Badger says there is no coverage.

As for civil authority coverage, which many businesses are trying to file a claim under, Badger says the trigger for this coverage “doesn’t apply to the current shutdowns.” Instead, Badger says “It relates to businesses forced to close because, for example, a neighboring property was damaged and authorities shut down a whole block for safety reasons.” Essentially, the point Badger was trying to make is that if a virus is listed as an exclusion in your policy or did not cause physical damage, then there is no coverage.

Now, because insurance companies and insured business owners in Hawaii continue to disagree on the physical effect the COVID-19 virus has had on a property, many are taking their denied claims to court. In fact, Honolulu Civil Beat reported that a group of celebrity chefs teamed up together along with a high-profile trial lawyer to pressure their insurers to cover their claims. The group calls itself the Business Interruption Group, or BIG.


How do I determine if I am entitled to business interruption coverage for COVID-19 losses?


If your insurance carrier denied your claim but you believe your policy entitles you to coverage, you should contact a Hawaii insurance claims denial lawyer who can provide you with a second opinion. can help you locate a lawyer nearest you who is qualified and ready to help you.

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