The summer of 2020 is over, and locally owned restaurants in Cape Cod are facing a life or death situation as the winter low season approaches and the COVID pandemic continues to crush revenues. Save for an end of the outbreak, one thing that could help Cape Cod restaurants and bars survive into 2021 and beyond is for insurance companies to honor the business interruption claims for which their clients have paid.

business closed covid 19 375x210 Cape Cod restaurants challenge denied business interruption claimsLike many business owners, Jeffrey Mitchell, who owns the Talkative Pig Restaurant and Marketplace in Chatham, paid for business interruption insurance that included a civil disruption clause guaranteeing coverage for government-ordered closures.

When COVID-19 struck, Mr. Mitchell and his partners were forced to close the restaurant for indoor dining. With revenues tanking and a lot of uncertainty about the future, the restaurant submitted a detailed business interruption claim with its insurer. Months later, The Talkative Pig is still waiting to hear back.


Restaurants, bars, and other businesses hard-hit by the pandemic and the government-ordered shutdowns are banding together with lawmakers across the country in an alliance dubbed THIRST – The Hospitality Industry Re-Imagined Security Trust.

The mission of THIRST is to pass a law that would force insurance companies to make good on their business interruption policies by honoring claims from companies that were ordered to close.

Policy flaws

After the 2003 SARS outbreak, the insurance industry added boilerplate clauses to many policies excluding losses caused by viral outbreaks. Those clauses are the reason why so many businesses are struggling to keep their lights on today. Many policyholders thought they were protected and have been blindsided by their rejected claims.

Mr. Mitchell, who serves as THIRST’s Cape Cod representative, told the Barnstable Patriot that the pandemic clause is short-sighted because it fails to take into account that businesses will be forced to close during a pandemic.

Almost all policies also have a civil disruption clause that provides coverage for losses stemming from government-mandated shutdowns. Massachusetts, like other state and local governments across the country, ordered restaurants to close for indoor dining in an effort to curb the pandemic. Many businesses did not have the option to stay open, which qualifies them for coverage under the civil disruption clause.

The cost of shutdowns

business owner empty restaurant 375x210 Cape Cod restaurants challenge denied business interruption claimsAccording to the Barnstable Patriot, THIRST estimates that it would cost the insurance industry between $3 billion and $4 billion to pay on COVID-19-related business interruption claims to restaurants. That amount, which would help so many businesses weather the pandemic, is a relative drop in the bucket to the insurance industry, which is sitting on reserves well over $800 billion.

“What we’ve seen, it seems like they’d be able to help us out,” Mr. Mitchell told the Barnstable Patriot.

Legislative remedies

Legislators in the U.S. House and Senate have introduced bills to address the business interruption insurance dilemma and get relief for restaurants like The Talkative Pig. But so far, these efforts have failed to bring any meaningful aid.

In Massachusetts, the State Senate is sitting on a bill that would require certain insurance companies in the commonwealth to include pandemic-related business interruption insurance coverage in their policies. SB2655 cleared the House on April 23 but has been stuck in the Senate since then.

The bill, if passed, will require insurers to pay on business interruption claims for loss of use and occupancy even when there is no physical damage to the property.

THIRST is currently creating a petition for hospitality business owners to sign, which could help pressure lawmakers to act on the proposed legislation.

With business interruption lawsuits piling up in courts throughout the U.S., there is also a good chance the issue will be decided by in the courtroom, likely at the federal level.

Ripple effect

Hospitality business owners say that while they may be the first to experience the effects of forced closures, a continual delay or denial of business interruption claims will have a ripple effect throughout the larger economy.

For instance, the clam shacks and ice cream shops that shape Cape Cod’s character could be forced to close if they are denied relief, and that would have real consequences in the community.

“If restaurants on the Cape do not get help and cannot afford to stay open then what makes Cape Cod unique is at risk,” Mr. Mitchell told the Barnstable Patriot. “That’s the thing that we really risk here,” he added, “is becoming just another place with corporate restaurants because those are the only people that can afford to pay for the food and everything.”

Amanda Converse, co-founder and CEO of Love Live Local, told the Barnstable Patriot that Cape Cod restaurants reinvest 50% of their income back into the community. Therefore, lost revenues due to restaurant closures amount to lost wealth for the overall community, which could have long-term adverse effects impacting businesses of all kinds.

“If there was ever a time for these claims to be honored by the insurance industry, it is during a global pandemic when our small businesses are being destroyed,” she said, according to the Barnstable Patriot.

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, and are involved in advocating for consolidation of these actions in multidistrict litigation (MDL). Dee Miles, head of our Consumer Fraud & Commercial Litigation Section, Rachel Boyd, and Paul Evans, lawyers in the Section, are spearheading this litigation for our firm and are monitoring all MDL developments as they arise. Please contact them if you have any questions or would like to discuss potential claims.

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