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St. Louis hotel takes insurer to court for denied business interruption claim

A landmark St. Louis, Missouri, hotel has filed a lawsuit against its insurance company and agent, alleging the insurer wrongfully rejected its business interruption claim for losses caused by the COVID-19 pandemic even when the policy covers “crisis events,” including communicable diseases.

The Last Hotel, a Hyatt property, filed the lawsuit against Cincinnati Insurance Co. The case is pending in an Illinois federal court. According to Law 360, the complaint says that shutdown orders issued by the St. Louis mayor and Missouri governor to ease the spread of the virus caused the hotel to restrict its operations by as much as 60%.

The Last Hotel’s restaurant, bar, and gym were also included in the shutdown orders. The lack of amenities caused the number of hotel guests to plunge, as well as its revenues.

When the hotel filed a business interruption claim with Cincinnati Insurance to cover the steep losses, the insurance company denied it.

The lawsuit argues that the Cincinnati Insurance policy includes coverage for a crisis event, including contamination of the premises by communicable diseases. There is an exclusion for certain illnesses in the hotel’s policy, but COVID-19 is not one of them. The virus is also not a “virulent human influenza” included in the exclusion, the complaint argues.

The Last Hotel’s lawsuit says that COVID-19 was likely present in the hotel, making its facilities unsafe and unusable for normal use.

According to Law 360, lawyers for the plaintiff said that the hotel’s policy “included business interruption coverage and additional crisis event coverage, expressly providing coverage for losses caused by just this sort of contamination, communicable disease and/or virus.”

The lawsuit seeks a declaratory judgment that Cincinnati Insurance owes the Last Hotel coverage for its pandemic losses and also for bad faith denial of coverage.

The complaint also names the hotel’s insurance agency as a defendant, alleging negligent procurement of insurance for promising to get the hotel an insurance policy it needs when it instead got the business a policy that Cincinnati claims excludes pandemic-related coverage.

Business Interruption Insurance Attorneys

Beasley Allen lawyers are actively investigating and filing claims against various insurance companies for denial of business interruption coverage during the COVID-19 pandemic. Dee Miles, head of our Consumer Fraud & Commercial Litigation Section, along with Rachel Nichole Minder and Paul Evans, are spearheading this litigation for our firm and are monitoring all multidistrict litigation (MDL) developments as they arise. Please contact them if you have any questions or would like to discuss potential claims.

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