PAOLI, Pennsylvania (WPVI) -- COVID-19 has delivered a devastating blow to a Chester County, Pennsylvania restaurant owner.
Revenues at Chris Peticacis' establishment, TJ's Restaurant and Drinkery, in Paoli is down 60%. Like many businesses he bought interruption coverage to protect against shutdowns that he did not cause himself.
But when he filed a claim for loss of business, it was denied.
He says, "The agents are basically saying, no, it's been denied, and there's not much that we can do right now. "
University of Pennsylvania Professor and insurance expert, Tom Baker, has been tracking claims for a possible study. He found the restaurant industry has filed the most claims, followed by healthcare services and personal and laundry services. He says insurance companies are denying coverage in two ways. Some policies clearly state viruses are excluded. Those policyholders are out of luck. But more often, the insurance industry is claiming the businesses didn't suffer "physical damage" that resulted in the loss of income, like say a fire or flood. He says many cases will end up in court.
"Whether it's going to be the biggest insured event, you know, that'll be fought out in court, but it's certainly the biggest insurance event because all these people have made these claims," said Baker.
We're gonna see a lot of closures because this is just going to drag on.
But Baker says many companies simply can't afford to litigate against large insurance companies.
Peticacis is part of the Delaware Valley Purchasing Group, a non-profit representing 1,200 establishments. The group is exploring legal options.
Baker believes businesses like Peticacis' have an argument depending on the policy.
"I think insurance companies moving forward, if they hadn't during SARS, are going to add some sort of language in coverage, you know, to protect them from having to pay out in the future for viruses," he says.
Baker says the insurance industry isn't doing anything evil and he understands their position.
Many insurance companies say the language in policies is designed to prevent catastrophic events that could bankrupt the industry.