KANSAS CITY, Mo. — Robert Klein has spent more than a decade building his dental practice. He has four offices stretching from Kearney to Kansas City.
He’s never closed his doors until this past spring when non-essential businesses were asked to shut down because of COVID-19. The only services Klein could offer were for emergency procedures.
About 99% of his business disappeared, Klein said, at a cost of more than $1 million.
“And that’s money we will never recoup,” Klein said.
Klein was initially hopeful that his business interruption insurance, which in 13 years he’s never once used, would cover at least some of the loss. He immediately called his broker.
“And the response was, ‘Oh, we can’t cover those kinds of things. That would bankrupt us,'” Klein said.
But Klein was determined. He spent more than 50 hours filling out paperwork to document his losses and file a claim.
But the day before he planned to submit it, he received a letter and a phone call from his insurance company, Owners Insurance, informing him that his coverage didn’t include pandemics and repeating the assertion that such coverage would bankrupt the company.
“That is a ridiculous argument, and it’s an argument they are going to keep making,” said Kent Emison, Klein’s attorney, who has filed a class action complaint against Owners Insurance, alleging a breach of contract.
“They have been collecting premiums from businesses like Dr. Klein’s for decades,” Emison said. “In 2018, the insurance industry collected over $1.2 trillion — that’s with a T — trillion dollars in premiums.”
Klein’s lawsuit alleges that his dental practice, like nearly every business, has an all-risk policy and therefore should cover all risks, unless there is a specified exclusion.
“Dr. Klein’s policy has no pandemic exclusion,” said Emison of Langdon & Emison. “It has no virus exclusion, so it’s clear to us there is coverage.”
Owners Insurance declined to comment, citing the pending litigation. But an insurance industry expert disputed the lawsuit’s claims.
“Insurance policies have exclusions, but before you get to the exclusion you have to trigger the insuring agreement,” said Bill Wilson who has written multiple articles regarding business insurance coverage during a pandemic. “That’s the problem with most of these COVID-19 business insurance cases is they don’t trigger the insuring agreement.”
Wilson, who has reviewed dozens of similar lawsuits but not Klein’s in particular, said the insuring agreement requires businesses to have physical damage or to be included in an entire geographic area closed because of the pandemic.
Until that happens, Wilson said, the insurance doesn’t kick in.
“It seems to be a technicality, but that’s the way contracts work,” Wilson said.
But Emison argued that it’s exactly the technicalities in the contract that he believes makes Owners Insurance responsible for the losses.
Experts predict it could take years of litigation before this issue is finally settled.