Shuttered businesses are finding that insurance plans often don’t cover pandemic costs

Updated: Apr. 6, 2020 at 5:45 PM HST
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HONOLULU, Hawaii (HawaiiNewsNow) - Hawaii’s ordered shutdown is hurting Pamela Strode’s daycare and preschools.

“I’m just hoping and praying that something will come through so that I can keep everyone employed," she said. “Twenty-four teachers work for Strode Montessori and really rely on these paychecks.”

She filed an insurance claim to cover the financial losses at her Strode Montessori Preschool and daycare centers under a policy in her plan called business interruption insurance.

So did Anna Funk who owns Skin Deep Tattoo and Piercing.

"The purpose of an insurance company is to mitigate risk, to take my money, my premiums, cash my check, and in the event of something catastrophic they in turn pay those claims out," she said.

But Strode and Funk came up against what small businesses across the United States are facing in dealing with their insurance companies.

Business interruption claims are being denied because pandemics and viruses are excluded in most policies.

"When we really need it and we need the help it's not covered," Strode said.

"A virus did not shut us down. The state of Hawaii did," Funk said.

Insurers argue the coverage applies only when structural damage closes a business. Insurance experts agree the growing conflict will lead to lawsuits.

"If they were made to do it by legislation or some other means, it would not surprise me if some of the smaller insurers would go under," State Insurance Commissioner Colin Hayashida said.

Funk created an online petition at that urges insurance companies to work together to cover the losses.

"Small businesses like mine should not be forced to apply for a loan as our first and only option," she said.

Strode is willing to pay higher premiums if that’s what it takes.

“No doubt costs are going to go up, but right now we’re just trying to get through day by day,” she said.

She believes her financial losses should be covered by her business interruption insurance even if her policy doesn't specify it.

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