Time to Read that Insurance Policy

Stephanie Melnick

Legal Updates,
Business Advice


You may have:

  • Coverage for loss of “business income” or for business interruption.
  • Coverage if a “Civil Authority,” such as a city or state blocks access to your business.
  • Coverage for contingent business interruption or supply chain


  • Coverage listed above generally applies if you’ve suffered a “direct physical loss.” But a direct physical loss does not have to be structural.  Courts have found the following constituted a “direct physical loss”:
    • Cat urine odor originating from another person’s condominium
    • Carbon monoxide contamination
    • Mildew contamination
    • Odors from illegal methamphetamine cooking
  • Loss related to a virus may be specifically excluded. For example: “We will not pay for loss or damage caused directly or indirectly by any of the following. . . . Any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease.

Even if coverage is not clear or certain, file a written claim with your insurance company and insist that the insurance company issue a written decision on your claim (e.g., a written denial with explanation).

Although the insurance company may deny your claim, you have options.

  • Litigate—sue for breach of contract. At least two actions seeking declaratory judgments that coverage exists are already pending, one in New Orleans and one in Oklahoma.
  • File a complaint with the Wisconsin OCI. But note, OCI cannot order an insurance company to pay a claim.
  • Watch and wait, but not too long. Your insurance policy will limit the time frame for filing a lawsuit. State legislatures or Congress may intervene. Although as of now, that’s looking unlikely.

In the meantime, there is some relief on the insurance front. Governor Evers ordered insurers operating in Wisconsin to assist restaurants who started delivery service during COVID-19 crisis. OCI also encouraged insurers to “offer flexibility to insureds who are incurring economic hardship.”

If you have questions about your business insurance policy, need help filing your insurance claim, or want to discuss options post-denial, please contact Stephanie.

Stephanie Attorney

Stephanie, owner of Melnick & Melnick, S.C. and self-described law nerd has been practicing law for over 25 years. Stephanie loves taking a deep dive into clients’ businesses to learn what makes them tick. She also relishes a well-written (short and simple) contract and is pleased to draft and negotiate all kinds, including leases, operating agreements, and terms of service.

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