A Consumer Protection and Employment Law Firm Serving California, Ohio, Pennsylvania, and Illinois.

Can Insurers Deny Small Business Claims Of Loss Due To The Pandemic?

323-690-1688
Table Of Contents
Summarize with
ChatGPT Claude Gemini Perplexity Grok
Nobody saw the COVID-19 pandemic coming. When small business owners took out insurance claims with the intent to protect their business, livelihood and families they felt they were protected. Recently, insurers have been denying business interruption claims submitted by businesses. Yet the loss of business is real. Entertainment and restaurants were possibly the hardest hit with eateries seeing a 41% drop the first week of April, according to reporting by NDP. 

Why insurers say they do not have to pay

There are many reasons why an insurance company may attempt to deny a claim. Insurance is a business with the goal of selling a service. The insurance company then uses the profits made to make more money. It is in the insurance company’s best interest to deny any payout it can to be more profitable. Insurance companies may claim an exception because after the SARS 2003 outbreak, insurance industry regulators approved an exception for viruses and bacterial outbreaks. Insurers then deny claims, stating that since the exception for COVID-19 is not spelled out in the policy, it is included in the outbreak exception. For example, Lloyd’s of London “anticipatorily repudiated” coverage stating that COVID-19 “is not covered under the Pandemic Event Endorsement” because it is not named in the endorsement. This begs the questions that if a virus is unknown and therefore unnamed at the time the policy is created, how can a small business owner list it to include it? Insurance companies may also claim that, unlike a tornado, flood or other natural disaster, a pandemic is not geographically controlled nor time-controlled: its duration is potentially infinite and everywhere. The insurance industry may also state that paying out for loss of income due to business interruption during the pandemic could bankrupt the insurance industry. Spokespeople and pundits have posited that it will be largely the federal government’s job to pay businesses or to adequately incentivise small businesses for their loss.

Special riders can protect businesses

A business may have purchased a rider (a policy amendment or addition) that would cover such things as a pandemic. This may be called pandemic event specialized coverage or communicable disease coverage. Businesses in certain geographic areas may also have included rider for bacterial, fungal, wet or dry rot and a bacterial, or viral outbreak. These riders are enforceable and, given no exclusions to the contrary in the agreement, business owners should be able to collect. Even though a business may not have suffered structural damage and loss of physical property, if a business owner purchased a rider or special endorsement, then it’s very likely that business would be covered for the the loss they suffered due to business interruption. In many legal cases property is not limited to physical items or the brick and mortar edifice of the business. “Property” can in some cases include a job or income.

Legislators are introducing bills to help small businesses

In California, U.S. Representative Mike Thompson unveiled a bill that would force insurers to honor claims. The bill would nullify any exclusion and state preemptions would not be allowed. Other states have also seen similar bills including New York, South Carolina and Ohio. Does your policy cover business interruption due a pandemic? If you are uncertain speak to a legal professional with experience in consumer rights issues.

Quick Navigation

Free Consultation

Undisclosed
Settlement

TCPA class action against the Los Angeles Times. Final approval granted 2014.

More Details
$750,000
Settlement

Common fund class-wide TCPA settlement against home healthcare provider. Final approval granted.

More Details
$27.6M
Settlement

TCPA class action certified on behalf of approximately 2,000,000 class members under Rule 23(b)(2) and (b)(3). Subsequently settled on a Rule 23(b)(2) and (b)(3) basis. Final approval granted.

More Details
$5.2M
Settlement

/

Unruh Act class action on behalf of approximately 240,000 consumers challenging Tinder’s age-based differential pricing for its subscription service. Final approval granted; subsequently went up on appeal.

More Details
$390,000
Settlement

TCPA class action alleging HD Supply sent unauthorized marketing text messages to consumers’ mobile phones without consent between October 21, 2011 and July 26, 2017. Presided over by Judge Fernando M. Olguin. Case terminated January 29, 2018.

More Details
$1,500,000
Settlement

/

TCPA class action against a Kansas-based payday lender alleged to have contacted consumers via prerecorded calls on their cell phones to collect alleged debts without consent. California federal judge granted final approval.

More Details
$6,500,000
Settlement

/

Cal. Penal Code § 632.7 class action certified by contested motion under Rule 23(b)(2) and (b)(3) on behalf of over 40,000 class members whose calls were recorded without their knowledge or consent. Final approval granted.

More Details
$13,000,000
Settlement

/

$13 Million Class action alleging HSBC recorded consumer telephone calls without knowledge or consent in violation of California’s Privacy Statute (Penal Code § 632.7). California Federal Judge granted final approval.

More Details
$34,000,000
Settlement

/

One of the largest TCPA class action settlements in U.S. history at time of approval. Alleged Chase used an automatic telephone dialing system to contact consumers on their cell phones without prior express consent from July 2008 through December 2013. Settlement class included over 32 million members. Final approval granted March 2016.

More Details
$150,000,000
Settlement

/

Class action on behalf of over 100,000 owners of GM vehicles equipped with allegedly defective LG-manufactured batteries posing fire and safety risks. Litigation commenced December 2020. U.S. District Judge Terrence G. Berg indicated preliminary approval of the $150 million settlement.

More Details
$100,000,000
Settlement

/ /

Landmark gig-economy class action. DoorDash drivers in California and Massachusetts alleged they were wrongly classified as independent contractors rather than employees. Firm served as class counsel. Final approval granted January 13, 2022 — the largest gig-economy worker class settlement in U.S. history at the time.

More Details

Schedule A Free Case Review

Why
Choose
Us

Premier Attorney To Defend Your Rights

With so many law firms in Southern California and throughout the United States, why choose the Law Offices of Todd M. Friedman?
Todd Friedman has been named a 2016, 2017, 2018, 2019, 2020, 2021, 2022, 2023, 2024, 2025 and 2026 Super Lawyer, a distinction of professional achievement and peer recognition.

Speak directly with attorney Todd Friedman about your case. Todd will evaluate your situation and provide prompt and straightforward feedback, saving you time and alleviating uncertainty.

Our firm has earned an A+ Rating from the Better Business Bureau, and has been accredited since 2010.

We are strong advocates for our clients and have the resources necessary to take on powerful opponents and win.

Contact Us

and start fighting back

We offer Free Initial Consultations.

If you have experienced a violation of your rights, call us at 323-690-1688 or fill out the form to the right →

Not ready to commit yet? Check out our Testimonials page and see what others have said about their experience
working with us!

 
Can We Text You At This Number?*

Office Locations

Los Angeles

View Location

Illinois

View Location

King of Prussia

View Location

Ohio

View Location

Free
Consultation

323-973-2580

Copyright 2025 Law Offices of Todd M. Friedman, P.C. All Rights Reserved.
Privacy Policy Disclaimer T&Cs Opt-Out Sitemap