A Boston-based seafood restaurant chain, forced to temporarily shutter during the government-mandated shutdown to prevent the spread of the coronavirus (COVID-19), has filed a lawsuit against Strathmore Insurance Co. for rejecting its business interruption claim.
Legal Sea Foods had been paying Strathmore for business owner’s insurance. The policy includes business interruption insurance, which provides coverage for payroll, bills, and operational expenses in the event a disaster forces the company to temporarily close down. But Strathmore told Legal Sea Foods that shutdowns due to COVID-19 are not covered by the insurance policy.
Many insurance companies added pandemic exclusions following the SARS epidemic in 2003, which doesn’t allow businesses to file business interruption claims caused by pandemics. Some insurers, like Strathmore, did not include this in their policy for Legal Sea Foods but are arguing that pandemics are still exempt.
In fact, Legal Sea Foods signed its most recent policy with Strathmore on March 1, 2020, when the coronavirus was a known threat. A week and a half later, the World Health Organization declared COVID-19 a pandemic. “They certainly would have known about it,” Legal Sea Foods CEO Roger Berkowitz told the Boston Globe.
Berkowitz is one of several business owners across the country who are fighting their insurers for coverage they feel they are entitled to by filing lawsuits. Many states, including Massachusetts where Legal Sea Foods is based, have introduced legislation within their states that would require insurance companies to cover business interruption claims related to government-mandated COVID-19.
Business seeking to sue their insurers for business interruption coverage should first file a claim with their insurance company to preserve any legal claims moving forward. Attorneys with Beasley Allen Law Firm are actively pursuing these cases already with our clients who received a denial communication from their insurance companies. Dee Miles, Head of our Consumer Fraud Section, Rachel Boyd and Paul Evans are spearheading this litigation for our firm. They would like to talk to you about any potential claims.