Insurance is supposed to be a safety net, but as business owners close their doors, they are having their claims denied. That's because many insurance policies do not cover closures related to viruses.
"We have an umbrella policy and it's just to cover the unexpected for things like fires and earthquakes and when the county closes us," said Jeff Silver of Rough Draft Brewing Company. "But when we put a claim in with our insurance company they denied it because of a virus exclusion."
Silver is one of many business owners who made the tough decision to close their doors because of the pandemic. He was hoping his business insurance would help him pay his bills.
"It is specifically business interruption insurance," said Silver. "It would cover things like our rent, bank loans, it could even cover wages for employees."
It turns out Silver's policy with Hanover Insurance only covers closures because of physical damage to the business. In a statement to NBC 7 Responds, Hanover said:
"Insurance works well and remains affordable when a relatively small number of claims are spread across a broader group, and therefore it is not typically well suited for a global pandemic where virtually every policyholder suffers significant losses."
Silver isn't the only business owner whose claim has been denied. Thomas Keller, the owner of Napa Valley's famous French Laundry, has filed a lawsuit because of the virus clause in his insurance policy.
The industry's trade union, the American Property Casualty Insurance Association, estimates paying for COVID-19 related closures could cost insurance companies up to $431 billion a month. If lawmakers force insurance companies to honor these claims, the industry says it could threaten other types of insurance payouts.
"Insurance stability is especially important in a time of increased natural catastrophes," reads the APCIA statement. "Spring flooding season is underway, hurricane season is around the corner, and wildfires pose a threat year-round ... Pandemic outbreaks are uninsured because they are uninsurable."
For now, Silver has had to lay off employees because he is not making any money and is still waiting for help from business assistance programs.
"The hardest part is laying your employees off. They're such a key part of this business and we were left with no choice," said Silver “Not knowing is also hard. When are we going to be able to open up, are we going to be able to open up, and up how long is this going to go on for?”