First, business insurance contracts generally require a "direct physical loss" before any insurance coverage can apply.

"Imagine if many employees of a company came down with the flu," says Robert Hartwig, chief economist for the Insurance Information Institute. "Even if it affects the company's income or ability to do business, there's no physical loss or damage so it isn't covered."

Furthermore, even the provisions of business interruption insurance that deal with a business or building being shut down by the authorities — a likely occurrence in the event of an anthrax exposure — require the same "direct physical loss" according to standard insurance policy forms developed by the Insurance Services Office (ISO).

Second is the problem of pollution and contamination exclusions. The ISO standard business insurance policies exclude coverage for "any solid, liquid, gaseous, or thermal irritant or contaminant" and for "nesting or infestation, or discharge or release of waste products or secretions, by insects, birds, rodents or other animals."

Exclusions for pollution, contamination, and infestation raise legal issues that also promise to be difficult to unravel, but contract language will determine who must prove their case.

"Ultimately it comes down to the type of insurance policy you have," says Don Griffin, a spokesperson for the National Association of Independent Insurers.

"Insurers would have a hard time saying 'anthrax just isn't covered.'"

According to Griffin, if you have a "named peril" insurance policy — protecting you only against losses specifically stated in the policy — it will be up to you to show why an anthrax exposure should be covered. If, on the other hand, you have an "all risks" insurance policy — protecting you against all losses except those that are specifically excluded — it falls to the insurer to show why they should not have to pay.

Therefore, in the hybrid of "named peril" and "all risk" policies that is business interruption insurance — covering all "direct physical losses" except those that are specifically excluded — if anthrax contamination is determined to be a direct physical loss, insurers will have to prove why the wording of their policy exclusions should apply.

"Insurers would have a hard time saying 'anthrax just isn't covered,'" says Griffin. "They would probably have at least a duty to defend their position unless they can point to specific wording regarding biological agents."

And that is good news for business owners, according to John Morrison, state auditor and commissioner for insurance and securities for Montana and the chairman of the National Association of Insurance Commissioners' ad hoc committee on legal issues resulting from the Sept. 11 terrorist attacks.

"The burden is always on the insurer to prove that an exclusion applies," says Morrison. "Any ambiguity is construed against the insurer."

"The burden is always on the insurer to prove that an exclusion applies."

According to Morrison, because the insurers write (or, in the case of standard forms such as from the ISO, choose) the insurance contract, it is their responsibility to be clear in what the policy language means, and gray areas are interpreted in favor of policyholders.

The bottom line, says Griffin, is that companies worried about anthrax exposure affecting their businesses should contact their agents, insurers, or both before spending money for which they may not be reimbursed by their insurance.

"As an industry we try to respond to things we anticipate, and this is something we didn't anticipate," says Griffin. "We simply haven't figured out how to deal with this yet, but we will."