Perhaps nowhere in the commercial sector has the novel coronavirus struck harder than the bar-and-restaurant, entertainment, and recreation industries. Among the handful of these businesses that haven’t closed, most are trying to scrape up enough money to pay whatever employees they have left, as well as rent, taxes, and insurance.

The latter has led to a heated dispute and lawsuits all over the country. 

The point of buying insurance, after all, is so that you can access help when you need it most, such as during disasters—like now. Yet many business owners are operating under the assumption—largely handed down from the insurance industry itself—that their business interruption policies don’t include COVID-19 coverage. Some have been told as much by their brokers. 

Insurers, they say, are categorically denying claims, often without explanation.

“The bureaucratic hurdles they put up to try to obfuscate the process is as close as you’ll get to Kafka’s The Castle,” says Ari Berenbaum, the owner of Ninth Street Bakery in downtown Durham, which has managed to stay open during the pandemic, but with revenue down by more than 50 percent. Berenbaum never filed an insurance claim. His broker told him he didn’t have a case. (He says he likes his broker, but she, too, is under the insurance industry’s heavy influence.)

Some local small businesses received federal assistance from the Paycheck Protection Program, but others ran into hurdles: Their banks mishandled their applications, or the $349 billion program ran out of money before their loan came through. Last week, Congress pumped $310 billion more into the program; those funds became available on Monday. There’s no telling how long it will last. 

The PPP’s unreliability leaves insurance as one of the few wells left to try to draw from. In Washington, major restaurateurs and the insurance industry are gearing up for a lobbying battle. The restaurateurs say the insurer lied to them about their policies; the insurers say the policies were never intended to cover a pandemic. Unexpectedly, perhaps, President Trump has signaled his support for the restaurateurs, saying the insurers should pay out unless policies specifically excluded pandemics. 

In Texas, a local theater chain sued its insurance company for denying its claim even though it had purchased “pandemic event” insurance. An Indianapolis theater sued its insurer, which said that it only had to pay a business-interruption claim if the building was damaged, though that wasn’t in the policy.

In North Carolina, a local lawyer has taken up the cause and is seeking out local businesses that may find themselves in this predicament. 

Gagan Gupta grew up near Charlotte, got his law degree from Stanford, and moved back to North Carolina in 2018, drawn with his fiancée to Durham’s “cultural richness,” he says. He lives near Ninth Street Bakery, where he’s a regular who’s friendly with Berenbaum.

“Watching the devastation happening around our city,” Gupta says, “I was talking to Ari about how they were dealing with everything, and I asked to see his insurance policy. I realized there’s an opportunity for coverage and financial recovery here.”

That possibility joined Gupta’s professional métier to his personal priorities. He launched a project at Paynter Law, a national boutique firm he’d recently joined, inviting any North Carolina business to submit its policy for him to read and evaluate, at no charge, so that he can pursue the possibility of a class-action lawsuit. 

“My main motivation was that I have so many friends who work for restaurants and small businesses,” he says.

The answer will vary from policy to policy, but in Gupta’s eyes, the question of coverage is certainly more nuanced than the blanket no he says insurers have given. The issue tends to be less what policies say than what they don’t. In many policies, there’s no language whatsoever about viruses, pandemics, or anything associated with COVID-19. And there are other ramifications that need to be explored. For example, although the coronavirus led to the closures, it was the government that ordered them.

“You may still be able to get coverage as part of the shelter-in-place order,” Gupta says. “Not because of the virus itself.”

With so many businesses consumed by emergency-level survival—and with the language of insurance policies often too byzantine to parse—Gupta says he’s “encouraging businesses everywhere to have somebody they trust look at their policies. We can fight this particular fire for them.”

Gupta was connected to Russell Dudley through the area’s collegially branching network of small businesses. Dudley owns and operates Top Notch Performance, an East Durham fitness studio that closed under the shutdown order. Like Berenbaum, he didn’t file a claim because he was told his policy wouldn’t cover it. 

For now, Dudley has frozen his clients’ accounts, and instead of sending out monthly dues bills, he emails at-home workout regimens (and also offers online classes for free).

“One of the ways to fight COVID is to keep healthy, keep your lungs strong,” Dudley says. “I think about people’s health and their safety.”

There’s little else he can do.

“I came from nothing and built something,” he says. “I’m going to take my beating. I’m going to fight as long as I can fight. But it depends on who you’ve got on your team. You don’t get too many people in the world who will fight for you.”

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