Business interruption policy doesn’t cover COVID-19 pandemic, insurance spokesperson says

WATCH: Business interruption policy doesn't cover COVID-19 pandemic, insurance spokesperson says

MEMPHIS, Tenn. — Takeout and delivery help pay the bills for the Cooper Young restaurant Tsunami, but the COVID-19 pandemic is hurting business.

“Easy 50 percent, probably more,” said Ben Smith, chef and owner of the Tsunami restaurant.

Smith told FOX13 he called his insurance company to see if his policy covers lost wages and revenue from COVID-19. He said the answer was a gut punch.

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“My company says there is no protocol for this. There is no precedent for this. This is completely new ground,” said Smith.

Many businesses have something called a business interruption policy that covers lost wages, damage and expenses in the event of either a tornado or an accident, fire or flood.

A spokesman for the Insurance Information Institute said this type of policy covers physical damage to a business, but not losses caused by a virus or bacteria.

The Managing Attorney for the Cochran Law Firm Memphis told FOX13 an insurance policy is like a contract. “You have to go into the language of the policy and see what are the specific exclusions,” said Howard Manis, who believes some business owners will file a lawsuit. “Yes. I was reading about one in New Orleans and Lloyds of London. I expect many others being filed and being contemplated,” Mains said.

Manis warned any lawsuit against the insurance giants comes with a risk of losing.

Losing his business is not an option for Ben Smith, but it is a fight without help from his insurance company. “We are evaluating the situation minute by minute, day by day as the information comes in,” said Smith.