▶️ Jake’s Diner workers return for last paychecks; insurance company says ‘virus’ exclusion is common


We told you yesterday about Jake’s Diner in Bend closing after the governor ordered restaurants to serve only take-out or delivery.

Today the diner’s more than 30 employees picked up their last paychecks. Many of them plan to file for unemployment benefits.

Restaurant owner Lyle Hicks said part of the reason he decided to close was his insurance company’s refusal to pay for an interruption of business due to an exclusion for viruses.

“I haven’t applied for unemployment yet because I have other means but I probably should.”

Marcie Risch says she’s one of the fortunate few laid off by the closing of Jake’s Diner. She has her own baking business and she works for the grocery delivery service Insta Cart.

“My daughter is in the restaurant business, a corporate chain. They went down to just take out,” Risch said. “She’s lead of the take out crew but her hours got cut back. I still made her apply for unemployment so she can get compensated for her loss and a lot of people are doing just that.”

On to the question why Jake’s Diner’s insurance company, Farmers Insurance, refused to cover interruption of business. 

The company today told Central Oregon Daily News today that the “virus exclusion” has been place for a decade. 

“The vast majority of our commercial policies have a virus exclusion which is applicable to business interruption coverages,” said Luis Sahagun, director of external communications. “Such exclusions have been in use for more than 10 years. We do not offer business interruption products that specifically cover virus and bacteria related interruptions to businesses,” Farmers said in a statement.

Janet Ruiz, a spokesperson for the Insurance Information Institute, says most business interruption policies do exclude virus related losses and focus instead on business related closures caused by direct physical damage, things like fire or windstorms. 

“Most mid-size to small businesses cannot purchase that kind of coverage,”Ruiz said. “There is some specialty insurance for very large businesses that does have some coverage available for things like virus.”

Farmers Insurance’s corporate office encourages consumers who have questions about their insurance coverage to contact their local agent to discuss their questions and review their coverage options.

“I know this is an issue that I’m not the only one having to deal with,” Hicks said. “There’s a lot of people all over the country dealing with this right now.”

And there’s a lot of out of work employees like Marcie waiting to see what comes next.

“I’m fortunate enough that my husband can work from home and his job’s not in danger.”

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