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Insurance likely won't cover Coronavirus-related losses for businesses

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Posted at 3:33 PM, Mar 20, 2020
and last updated 2020-03-20 22:06:32-04

SAN DIEGO (KGTV) -- Emily Lake opened Sisters Pizza in Hillcrest last summer to honor her sister Kate, who passed away at an age too young.

Her restaurant features a wall of framed pictures of sisters and people who are like sisters - many who have become regulars at the neighborhood eatery.

"People have contributed pictures of them and their sisters, them and their friends, and it's not just women. It's anybody who has a close relationship," Lake says.

Lake says business had been going even better than expected, until the coronavirus outbreak. Now, her restaurant and those across the county have been reduced to takeout and delivery.

"Being any sort of small business owner, and such a brand new one too, we're just navigating scary waters and doing the best we can," says Lake, who owns the restaurant with her husband Trevor.

Lake estimates that 60 to 70 percent of their revenue is gone forever. That's because standard insurance policies do not cover loss of business for viruses and bacteria.

"I thought that it would be a force majeure or considered an Act of God, and unfortunately it is not," Lake says. "Even in our catastrophe insurance, which would cover earthquake or other natural disasters, this pandemic is not included."

But those in the insurance industry say it's an uncertain situation. That's because businesses aren't contracting or closing because they themselves have become infected. Instead, they are doing so because the government is telling them to.

One San Diego insurance broker told 10News businesses should make a claim regardless. If it's denied, so be it.

Lake said she'd look into that option.

"At this point we'll pull out all the stops in order to stay in business," Lake said.

Meanwhile, California's Department of Insurance is advising all business owners to contact their insurance companies to go over options. A department spokesman added that insurance Commissioner Ricardo Lara is communicating with state and federal authorities on options for businesses.