Nearly a year after the bombings at the Boston Marathon, many of the businesses that reported financial losses from the explosions and aftermath are still struggling to collect reimbursements from their insurance companies or have had their claims denied outright.
The state’s largest property and casualty insurers have paid a total of $1.9 million in bombing-related claims, according to the state Division of Insurance. But the insurers flatly rejected a large percentage of claims by businesses and have offered partial compensation on many others.
The denials of claims have angered some business owners, who say they collectively lost millions of dollars in the days after the bombings.
Insurance industry officials said there are many valid reasons for claims to be rejected, such as specific policy exclusions that limit coverage for lost income. But there is also plenty of room for disagreement within the fine print.
“Why do you pay insurance if they don’t cover you?” said Perry Geyer, the owner of Cybersound Inc., a Newbury Street recording studio that reported $9,000 in losses. “We never got one penny from them and we lost a lot of business that week.”
Declan Mehigan, co-owner of the Globe Bar & Cafe and Lir bars on Boylston Street, is still negotiating with his insurance company to recover lost income. The bar owner said the Globe bar, which was forced to close for nine days, filed a claim for $36,000 in lost income but received less than $20,000 six months later.
For Lir, Mehigan said, his insurer has offered $26,000 to settle a claim for $46,000 in losses.
“We’re still negotiating with the insurance company to get the best deal possible,” he said. “I believe we’ll get the money. We’re just not going to take their low-ball offer.”
Mehigan said he lost a lot of money in the bombings’ aftermath that will never be recovered, but business picked up swiftly after he reopened and customers flocked to the bars to offer support. “It made the sting go away a little,” he said.
Physical damage from the blasts was limited to a few storefronts on Boylston Street. But the financial losses were widespread, as many restaurants, hotels, and stores lost several days of business during one of the busiest times of the year.
Dozens of storefronts on and around Boylston were shuttered for more than a week while authorities swept the area for evidence and responded to subsequent bomb scares. Hundreds more businesses were forced to close in and around Boston when the state issued a shelter-in-place order after the frantic search for the suspects. The order lasted one business day, ending shortly before authorities discovered suspect Dzhokhar Tsarnaev in Watertown.
Despite the chaos caused by the bombings, insurance division data supplied to The Boston Globe show that the state’s 25 largest property and casualty insurers have declined to make any payments on 85 of 207 claims stemming from the attacks, as of Jan. 24.
Insurers have rejected nearly half of 133 bombing-related claims that specifically cited losses from business interruption, according to the insurance division data. Similarly, the regulators say, those insurers rejected payment for 11 of 27 claims for commercial property damages.
The insurance division report does not discuss the reasons for the rejections and does not detail the individual claims or the names of the insurance companies.
Frank O’Brien, a spokesman for the Property Casualty Insurers Association of America, said it is understandable that some businesses would be frustrated by the denial of claims.
But O’Brien said claims like those following the bombings are complicated and often turn on exclusions contained within individual policies.
For example, some policies exclude coverage for losses within the first 72 hours of an event, meaning businesses would only be able to claim income lost after that point.
“We as an industry feel we did a good job responding, as we respond to other catastrophes,” O’Brien said. “We’re a contract-based business. We collect a premium based on the risk we signed up to cover, and it’s not a good business practice for us to begin to re-write the contract post-event.”
But some business owners said insurers are carefully parsing policy language to deny claims.
Cybersound’s insurer, the Hanover Insurance Group Inc., said it denied the company’s claim because the business was not shut down by civil authorities in the aftermath of the bombings.
But Geyer said the street closures ordered by authorities made it nearly impossible to reach his studio.
Robin Helfand, the owner of Robin’s Candy on Newbury Street, said she has only recovered a fraction of the $100,000 in losses she claimed.
“I am frustrated and disappointed,” said Helfand. “In 10 years I’ve never had a claim. For them to walk away at this point is not only unfair, but mean-spirited.”
Helfand, who declined to name her insurer, said her candy store closed for a full day during the manhunt for the suspects and then intermittently for the next several weeks. She said sales were down 60 percent in the two months following the attack and she also lost thousands of dollars in spoiled inventory.
Cybersound and Robin’s Candy are being represented by lawyers from the Boston firm Posternak Blankstein & Lund, which volunteered its services through a program created by the Boston Bar Association to help individuals and businesses affected by the bombings.
Attorney Jon Cowen, who has represented Robin’s Candy, said the claims process has been long and contentious. “The insurers are taking kind of a hard-line approach,” he said. “And it’s a little surprising and upsetting for our clients.”
John Schall, owner of the Harvard Square eatery Fire + Ice, said he was able to get reimbursement from Farmer’s Insurance, after a lengthy fight over the fine print.
He said the insurer rejected his claim after it decided the bombing and subsequent manhunt were separate coverage events. Because Schall’s policy did not cover him for the 24 hours immediately following each event, Farmer’s found he was not entitled to repayment for business lost after the attack or when he was forced to close during the manhunt.
“It just seemed wrong,” he said. “It seemed like this was an insurance company trying to avoid paying a claim. In three years I had paid these guys $54,000 in premiums, and the first time you file a claim they come up with a reason not to pay it.”
Schall said he wrote a letter about his claim to the Division of Insurance, which informed Farmer’s of its directive that the bombing and its aftermath be considered one coverage event. The insurer then agreed to pay $8,000 for the income Fire + Ice lost during the manhunt.
A spokesman for Farmer’s said, “Based on the DOI’s clarification, we were able to classify the loss as a single event, and the customer was promptly paid. We agree it’s the right thing to do here.”