On Thursday, May 21, American Booksellers Association (ABA) board member Chris Morrow, of Northshire Bookstore [5] in Manchester Center, Vermont, and Saratoga Springs, New York, participated in the House Small Business Committee virtual forum “Business Interruption Coverage: Are Policyholders Being Left Behind?” [6]

Morrow was among five panelists chosen to participate in the forum. Other panelists were Francisco Schlotterbeck, CEO of Maya Cinemas [7]; Mark Shaker, co-founder of Stanley Marketplace [8]; John W. Houghtaling, II, Managing Partner of Gauthier Murphy & Houghtaling LLC [9] (on behalf of the Business Interruption Group); and Sean Kevelighan, president and CEO of the Insurance Information Institute [10].

The forum gave members of the committee the opportunity to hear from policyholders and stakeholders about how small businesses have tried to maximize their long-term survival in part by filing claims under their business interruption insurance policies; however, businesses have been denied nearly across the board — either because policies did not explicitly cover viral pandemics or they included viral pandemic exceptions.

In his opening statement, Morrow spoke to his personal experience with business interruption coverage. While Morrow has had business interruption insurance for both of his stores for quite a long time, he fortunately never had a reason to use it until now.

As a result of COVID-19, Morrow filed claims for both stores with two different insurers. “My claims for both stores were rejected, citing language in the policies. There were virus exclusions and the need for physical harm to the buildings,” said Morrow.

The length of the policies and the arcane language of the policies, coupled with the immense workload of small business owners, can make it difficult for small businesses to determine what exactly their business interruption insurance will cover.

“I had tried to mitigate my risk as much as possible as a business owner, but the insurance companies are clearly much better at that,” Morrow stated.

Morrow said his sales loss for both stores “is impossible to overcome without help.” He continued, “It sure would have been nice if my business interruption insurance policies covered my business interruption.”

Generally, business interruption insurance covers the loss of income a business suffers as a result of a disaster. Business interruption coverage may apply when businesses have to rebuild following a disaster or are physically damaged due to a disaster. This coverage may be separate from general business insurance.

Since government stay-at-home orders have mandated many small businesses cease in-store operations, business owners have tried to file claims under their business interruption coverage. Upon denial, some small businesses have looked to the courts.

The virtual forum sought to examine possible relief for small businesses with business interruption policies that do not cover pandemics.

Morrow also took the opportunity to speak about the Paycheck Protection Program (PPP). While he recognized that the PPP was “a well-intentioned effort” to mitigate business interruption, Morrow also pointed out much-needed changes to the program. These changes include the eliminating the 75/25 rule, allowing for the deductibility of business expenses paid for with forgiven PPP funds, and extending the eight-week period.

Further, Morrow said that the PPP was too narrowly focused on just keeping people employed for two months and “not about keeping my business healthy and viable for the longer term.”

Representative Steve Chabot (OH-1) later addressed Morrow’s concerns about PPP specifically, saying the House is expecting a vote on the Paycheck Protection Flexibility Act [11] on Wednesday, May 27. The bill would implement a number of reforms to the PPP.

Watch the business interruption insurance forum in full here. [12]