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This month, the proprietors of more than 10 restaurants, bars and bakeries in Washington, D.C., including the Michelin-starred Gravitas and Pineapple and Pearls, sued their shared insurance company, joining a growing list of restaurateurs who are seeking relief from an industry they thought would protect them from any unpredictable event, including a pandemic of historic proportions, the Washington Post reported. The owners are pressing carriers to honor business-interruption policies during an outbreak that has wreaked so much financial havoc that it could bankrupt insurance companies and put at risk claims not related to covid-19. One side has few cash reserves and a trickle of revenue from takeout and delivery. The other side has an $800 billion surplus that, despite its size, could vanish in a matter of months, insurers say, if they start paying out these claims. After governments shut down dining rooms, restaurants large and small started taking their insurance cases to the courthouse: Boston-based Legal Sea Foods sued Strathmore Insurance Co. The owners of Musso and Frank, the century-old Los Angeles institution, sued Mitsui Sumitomo Insurance. A Houston restaurant company sued Scottsdale Insurance Co. Some complaints seek class-action status. Others have been filed by a single operator, such as Thomas Keller, the mastermind behind the three-star Michelin restaurants Per Se in New York and the French Laundry in California, who sued Hartford Fire Insurance Co. These operators’ claims have usually been denied for one of two reasons: The policy specifically excluded viruses or the property had not suffered any physical damage, like after a flood, hurricane or other natural disaster. Attorneys for the restaurants don’t think the denials are as clear as the carriers say, especially with all-risk policies, those with limited coverage for viruses (like Keller’s) or those that cover “civil authority” actions such as when a city, county or state shuts down in-person dining.

Congressional leaders are girding for a fight over the reentry of millions of Americans to the workplace, with Senate Majority Leader Mitch McConnell (R-Ky.) insisting that employers be shielded from liability if their workers contract the coronavirus, the Washington Post reported. He appears to have the backing of top White House officials. Democratic leaders have declared that they will oppose such blanket protections. The battle has unleashed a frenzy of lobbying, with major industry groups, technology firms, insurers, manufacturers, labor unions, and plaintiffs lawyers all squaring off. Key GOP senators are circulating drafts of legislation to set up legal protections they say would give businesses the confidence to reopen without worrying about lawsuits. “It seems intuitive to me that if you’re a marginal small business and you’re making the decision whether to hang in there and try to survive, or whether you’re just going to give up and either declare bankruptcy or just become insolvent, that this would around the margins, this could make the difference,” said Sen. John Cornyn (R-Tex.). Cornyn is working on legislation that would shield businesses from liability over coronavirus-related claims as long as they comply with government guidelines.

Lawmakers and regulators are pressuring insurers to go beyond the legal language of policies to get cash to Americans amid the mounting cost of shutdowns from the coronavirus pandemic, the Wall Street Journal reported. In at least three states, lawmakers have proposed legislation to force insurers to pay billions of dollars for business losses tied to government-ordered shutdowns. In other states, regulators are pushing insurers to expand coverage under personal-car policies to also cover certain commercial activity, such as delivery of takeout meals by owners and employees of restaurants that are struggling to survive bans on dine-in eating. Some regulators have declared moratoriums on cancellations and nonrenewals of policies. And some are urging car insurers to lower people’s bills. These states note that policyholders now working from home don’t have the commutes they used to and thus aren’t on the roads as much. This push comes despite specific contractual exclusions in most standard policies for claims stemming from viruses. As a result, some insurers are threatening court challenges over these efforts to rewrite policies and provide benefits that weren’t priced in. “If elected officials or courts require payment for perils that were excluded and for which no premium was ever collected, catastrophic results are likely to occur and we may deal with a second crisis: insurance insolvencies and impairments,” said Charles Chamness, president of trade group National Association of Mutual Insurance Companies. While insurers are pushing back hard on some fronts, they are accommodating in other areas. Allstate Corp., Berkshire Hathaway Inc.’s Geico, Hartford Financial Services Group Inc., Liberty Mutual Insurance, Progressive Corp., Travelers Cos. and USAA are among insurers that have extended deadlines, waived fees or taken other steps to help people avoid cancellations for nonpayment. Some also are approving the use of personal vehicles for food and other essential deliveries.

The coronavirus outbreak has closed suppliers in China, but insurance policies meant to protect companies from business interruptions probably won’t cover the losses, the New York Times reported. On Tuesday, the Organization for Economic Cooperation and Development laid out just how bad things could get: If the coronavirus continues to spread, it could cut the year’s global growth by half, to 1.5 percent for the year instead of the 2.9 percent that the Paris-based research group had forecast before the epidemic took off. Many businesses have insurance policies that are meant to kick in when disaster strikes. But few of those policies will cover losses incurred because of the outbreak. Companies typically buy a kind of coverage known as business interruption insurance as part of their property policies, which pays cash to make up for lost revenue when a business has to halt operations unexpectedly. A close relative, contingent business interruption insurance, kicks in when the shutdown is at a supplier of the insured company. At first glance, those might seem perfect for the current epidemic, which has caused quarantines that shut down factories in China, severed links in supply chains and disrupted business activity for hundreds of companies from Microsoft to Marriott. But those policies almost always cite “direct physical loss or damage” as a requirement to get a payment. Read more.

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From Richard Branson’s Australian airline to U.S.-based cinema chains and casino operators, the companies most vulnerable to the coronavirus outbreak are facing mounting pressure in global credit markets, Bloomberg News reported. An escalating outbreak that drives off customers and revenue could lead to ratings downgrades, hinder refinancing efforts, and in some cases trigger defaults. And it’s more than just travel companies: Debt-laden commodities producers, shipping firms and luxury automakers have endured waves of selling by debt investors as they ratchet down expectations for global growth. Creditors who’ve spent years pouring money into nearly everything the credit markets had to offer are balking now that the outbreak has spread to more than 65 countries. That’s stoking fears of a prolonged slump in riskier assets. While Central banks from the U.S. to the U.K. and Japan have all said that they stand ready to roll out stimulus to support credit markets, it’s not clear the tactic will work if the problem is an historic slump in consumer demand.

Don’t miss a special abiLIVE webinar on March 10 looking at supply chain disruption & other financial effects of the coronavirus. Register here.

The defunct Hahnemann University Hospital has agreed to provide insurance for hundreds of new doctors displaced by the historic Philadelphia institution’s bankruptcy, WSJ Pro Bankruptcy reported. The hospital and its insurance company — also controlled by Joel Freedman, the investment banker who led the group that acquired Hahnemann in early 2018 — will cover a gap that had threatened the professional futures of residents and fellows who were in training at the hospital when it closed down last year. Hahnemann will pay about two-thirds of the $9 million cost of the insurance, and Freedman’s affiliated insurance company will pay for the rest, according to a Thursday court filing. The agreement ends months of uncertainty for hundreds of new doctors, who were trying to find a way to cover insurance premiums as high as $95,000 to protect against lawsuits that might not be filed for years, stemming from their work at Hahnemann. More than 900 doctors were in danger of having their professional credentials tarnished if they couldn’t find replacement insurance. The offer from Hahnemann and its owners to provide insurance came after months of talks spurred by a threat from Judge Kevin Gross to oust the hospital company’s management from control, and put a trustee in charge of Hahnemann’s bankruptcy.