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With coronavirus affecting supply chains and causing event cancellations, lawyers say disrupted businesses will start looking to their insurance providers to make up their losses.

But while companies losing money are likely to file claims, lawyers expect insurance providers to argue that coronavirus disruptions aren't covered by the policies. With so much money on the line, this could spark litigation by the policyholders against their insurers.

"The scope of potential claims in the insurance market is astonishing, really," said Norton Rose Fulbright partner Neel Lane of San Antonio, who represents major insurance companies. "The more I think about it, the more that I can imagine various sorts of insurance claims based on the pandemic that we are experiencing."

Haynes and Boone partner Adrian Azer of Washington, D.C., said on a Tuesday webinar by the American Bankruptcy Institute that many companies purchase "business interruption" coverage as part of their property insurance policies.

"That is where you are probably going to get coverage out of this," he said.

Normally, an "act of God" event like a hurricane or flood triggers that coverage, said Azer, who  expects insurance providers to argue that coronavirus does not count as a "physical loss or damage" at a facility for insurance purposes. But Azer added that courts in New York have found that an E. coli bacterial outbreak did require insurance coverage.

Some companies may file claims under "civil authority" coverage, which helps with problems stemming from government actions.

"You could see the U.S. government locking down entire towns, like they are doing in Westchester, for example," Azer said, noting that this is the type of thing that civil authority coverage is designed to cover.

Neel, the San Antonio insurance litigator, said a company that offers events to the public may face a quandary when deciding whether to proceed, or cancel. On one hand, there are advertisers, ticket holders and vendors who want the event to go on. On the other hand, the company could be liable if it holds the event and causes coronavirus to spread.

"It's a damned if you do, damned if you don't situation," Neel said. "Recently, I was trying to figure out if a client could purchase protection against having to cancel an event based on a pandemic, and specifically, coronavirus. What I understand is: There is no coronavirus coverage. All event coverage, going forward, will completely exclude coronavirus as a covered loss."

Azer, the Washington, D.C. insurance lawyer, explained that after the SARS epidemic in 2003, many insurance companies specifically excluded coverage for losses from bacteria or viral infections from events coverage. To have those risks covered, companies would have to ask for it specifically, and of course, pay higher premiums.

"You really have to dig into your policy and examine it," Azer said.

Neel said that he can imagine disputes over many more scenarios.

For example, he said that directors and officers insurance coverage may come into play if a company faces a lawsuit alleging it did not do enough to protect its own employees, or its customers, from exposure to a pandemic.

If a company's quarterly earnings take a hit because of coronavirus disruptions, it's possible that shareholders will file suit, alleging the company failed to disclose the vulnerabilities in its supply chain, Neel said. He's not sure those types of lawsuits will succeed, but said it's certain that insurance companies will be forced to review them to see if coverage applies.

There's one type of suit that Neel definitely expects to see, probably within this year.

He explained, "If you operate any kind of health facility where you have numerous residents or patients, you are going to be at particular risk of suit if someone dies and it's alleged you didn't take reasonable steps to protect the safety and lives of the patients."