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Illustration: Aïda Amer/Axios

Irate business owners are finding out the hard way that their insurance policies don't cover coronavirus — and they're suing.

Why it matters: No matter how big a premium a company might pay for business interruption insurance, most policies only cover physical damage to a property, not the loss of use of a hotel, restaurant or other building from a stubborn new virus.

Driving the news: Companies like Legal Sea Foods, the Boston restaurant chain, are suing their insurers, saying in some cases that their policies don't have pandemic exclusions and thus should be honored.

  • "Everyone's policy is a bit different, but we had negotiated an all-risk policy, and virus and COVID-19 were not excluded from that," Roger Berkowitz, CEO of Legal Sea Foods, told Axios' Dan Primack on Wednesday's Pro Rata podcast.
  • At least one law firm, Jaszczuk P.C. — based in Chicago, specializing in business insurance recovery litigation — has set up a dedicated helpline for business owners.
  • Even President Trump weighed in on the topic, saying he “would like to see the insurance companies pay if they need to pay.”
    • “You have people that have never asked for business-interruption insurance, and they’ve been paying a lot of money for a lot of years for the privilege of having it,” Trump said at a White House briefing last month. “And then when they finally need it, the insurance company says, ‘We’re not going to give it.’ We can’t let that happen.”
    • Separately, a group of lawmakers wrote to insurance trade group leaders to ask them to urge their membership to cover COVID-19 under business interruption policies.

Between the lines: Insurance is regulated at the state — not federal — level. "What happens in one state may not be what happens in another state, and underwriting rules can be different company by company," Erin Ardleigh, founder and president of Dynama Insurance, an independent insurance broker, tells Axios.

  • "It's really important to actually look at the fine print of your policy to see how you're affected," she says.
  • For the purpose of life insurance, it's too soon to say whether insurers will consider COVID-19 a pre-existing condition among people who have recovered, Ardleigh says — but for anyone thinking about buying a new policy, she advises doing so sooner rather than later.

"This is definitely uncharted territory," Alexandra Roje, a partner in law firm Lathrop GPM’s insurance recovery practice, tells Axios.

  • In a typical business interruption insurance claim, "a hurricane comes through and destroys your Walmart," Roje says. "Not only is there property damage, but it's also the fact that your business is down for a certain amount of time."
    • What makes the current situation more challenging: "We don't have a hurricane, we don't have a tornado or a fire — but we have a virus."

Already, there have been noteworthy winners and losers in the "event cancellation" category of insurance:

  • The South by Southwest film and culture festival — known as SXSW — didn't have the right insurance policy to file a claim after it was cancelled in March.
    • The Austin Chronicle quoted SXSW co-founder Roland Swenson as saying: “We have a lot of insurance (terrorism, injury, property destruction, weather). However, bacterial infections, communicable diseases, viruses and pandemics are not covered."
  • Meanwhile, the organizers of Wimbledon will reportedly reap $141 million after having taken out pandemic insurance for 17 years, at a cost of $34 million.

What's next: Look for innovation among insurers to offer various forms of coverage against COVID-19 — at a price — or to specifically write policies that exclude it, to hedge against giant payouts.

  • In 2018, Marsh, the big insurance company, introduced a boutique pandemic insurance product called PathogenRX.
  • "I equate it to a kind of roulette," Christian Ryan, Marsh's U.S. sports, gaming and hospitality practice leader, tells Axios. "You put your bet on red, and if the disease happens," the company that bought the insurance could collect the full value of its bet — the maximum policy limit. (If it doesn't happen, the carrier is the winner-take-all.)
    • This type of insurance "is going to be on the tips of the tongues of all the boards and companies right now, that have experienced major losses" as a result of coronavirus, Ryan predicted.

The bottom line: Even with the spate of disputed claims from business owners, big insurance companies are taking huge hits to their bottom lines.

  • Per the WSJ: AIG, Prudential and Allstate's first-quarter earnings reveal "wide-ranging effects of COVID-19, including a surge in business-interruption claims, poorer investment results and an auto-policy windfall."
  • "All cautioned that the second quarter would be more revealing of the pandemic’s impact."

Go deeper

Fauci's guidance on pre-vaccine coronavirus treatments

Illustration: Aïda Amer/Axios

Antibody drugs and various medicine cocktails against the coronavirus are progressing and may provide some relief before vaccines.

The big picture: Everyone wants to know how and when they can return to "normal" life, as vaccines are not expected to be ready for most Americans for at least a year. Two therapies are known to be helpful, and more could be announced by late September, NIAID Director Anthony Fauci tells Axios.

Updated Oct 7, 2020 - Health

World coronavirus updates

Expand chart
Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Axios Visuals

New Zealand now has active no coronavirus cases in the community after the final six people linked to the Auckland cluster recovered, the country's Health Ministry confirmed in an email Wednesday.

The big picture: The country's second outbreak won't officially be declared closed until there have been "no new cases for two incubation periods," the ministry said. Auckland will join the rest of NZ in enjoying no domestic restrictions from late Wednesday, Prime Minister Jacinda Ardern said, declaring that NZ had "beat the virus again."

Georgia governor to drop lawsuit over Atlanta's mask mandate

Gov. Brian Kemp speaking in Atlanta on Aug. 10. Photo: Elijah Nouvelage/Getty Images

Georgia Gov. Brian Kemp (R) announced Thursday he plans to withdraw a lawsuit that sought to block Atlanta’s face mask mandates and coronavirus restrictions, the Atlanta Journal-Constitution reports.

Why it matters: The decision to withdraw the lawsuit ends the legal feud between Georgia's Republican governor and Atlanta's Democratic leadership, Mayor Keisha Lance Bottoms. Other Georgia cities will be able to keep their mask mandates in places for now, per AJC.