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Many insurers won't cover small businesses and their losses caused by coronavirus pandemic

"We're mandated to carry insurance and we do it for quote protection, when really unless it's a car fender bender or something, insurance rarely pays."

BOISE, Idaho — The coronavirus pandemic is leaving few things untouched in its wake, especially small businesses. Now as the size and the scope of the losses caused by the pandemic become clearer, some small businesses say their insurance companies are denying their loss of income claims.

Business owners can pay anywhere from hundreds to thousands of dollars a month for their insurance. For Ted Challenger, who owns three small businesses, his insurance costs over $30,000 a month and now his insurance company is denying his claims.

Challenger owns three bars in downtown Boise - Strangelove, The Amsterdam, and Dirty Little Roddy's.

"I no longer view myself as a customer [to his insurance company] just as a liability to the money I pay on," Challenger told KTVB during a FaceTime interview on Saturday. "It's actually kind of sad."

He continued that he isn't hopeful that his insurance company will cover his losses caused by the coronavirus pandemic.

"It was one day after we turned in the claim and they tried to say you closed because of coronavirus and I said no actually that's not true," he explained, "I closed because of a civic action and basically we danced a little bit and then they said well we're not going to cover that."

After his claim was denied, Challenger turned to his attorney.

"He checked all over the country and there has not been one case successfully ever to challenge the closed from a virus or civil action, so that was a huge letdown," he explained. "We're mandated to carry insurance and we do it for quote protection, when really unless it's a car fender bender or something, insurance rarely pays."

He hopes now that state legislators will rethink what people accept for insurance policies and urges others to lobby to make insurance fairer. He also hopes Congress will see what is happening to small businesses and step in.

Challenger isn't the only small business owner running into the issue of insurance companies not covering losses caused by the shutdown to slow the spread of the coronavirus. 

Kristina Anderson owns Oak Barrel of Eagle and said her insurance company also denied her claims.

"We pay a lot of money for insurance, business insurance," she said. "We pay into this month after month, year after year and something like this should be a covered occurrence." 

Anderson said a situation like the coronavirus pandemic forcing her business is one of her worst nightmares.

"We work so hard for so long to build a business that we love," she said, "to have it all taken away from you with circumstances out of your control is our worst fear."

RELATED: As Idaho makes some progress flattening the curve, Gov. Little mulls next step in stay-home order

The director of the Idaho Department of Insurance, Dean Cameron, said many loss of income policies, also known as business continuation plans or business interruption plans have a series of exclusions, which could include viruses and communicable diseases.

"These are policies employers can buy so that if their business gets interrupted there's an income or flow of revenue in order to help maintain their business," Cameron said.

He added that there were plans to make insurance cover businesses' losses regardless of exclusions, but doing so could cause other major issues.

"There were proposals to go retroactive and make insurance companies pay for it, but those proposals didn't come forward and some states have looked at it and we are monitoring and watching what other states are doing," he said. "I would also note one of the concerns that were raised over asking the carriers to pay for it retroactively is that it would likely bankrupt many of these carriers and so that's also not helpful to the overall general population either."

RELATED: Treasure Valley businesses denied liquor license renewal extensions amid coronavirus pandemic

In the meantime, Cameron said businesses can reach out to the Idaho Department of Insurance for help and said the department will be releasing more information and guidance for small businesses next week.

"We know nobody predicted a pandemic like this," he said, "and so the language in some cases is a little vague and if you have a contract in which the language is vague then in likelihood we're going to ask the carrier to pay the employer."

You can email Cameron with your questions or concerns at dean.cameron@doi.idaho.gov

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