Chez Panisse, a legendary California restaurant owned and operated by chef Alice Waters, has joined the ranks of restaurants suing their insurance companies for denying business interruption claims amid the coronavirus pandemic.

Chef Waters, who opened Chez Panisse in 1971 and has run the Berkeley establishment since, alleges that AMCO Insurance Company wrongfully rejected her compensation claim for losses resulting from the government-mandated shelter-at-home orders and shutdowns.

The lawsuit states that the restaurant “spent years paying hefty premiums for business interruption insurance” and that the insurer “has an obligation to help provide economic relief to my team and restore the wide-ranging supply chain of small farms and businesses that Chez Panisse relies on to provide fresh and local cuisine.”

“The servers, cooks, farmers, ranchers and other hard-working people in the Chez Panisse family are seeing their livelihoods in jeopardy because AMCO has declined to live up to its responsibilities as our insurer,” Chef Waters said in a press release.

Business interruption insurance provides coverage for economic losses resulting from various covered risks, such as a fire, vandalism, and even government-ordered shutdowns. Language and exclusions vary from policy to policy, but most cover losses caused by government-ordered shutdowns, curfews, and physical damage to property. Insurers, however, are rejecting claims for coronavirus shutdowns by arguing that business interruption policies do not cover government-mandated shutdowns due to a viral outbreak or pandemic. They also reject interpretations that viral outbreaks amount to physical damage that renders a property unusable.

Chez Panisse filed a business interruption claim with AMCO in early May reporting a loss of income after Alameda County issued a shelter-in-place order March 16 that severely impacted the restaurant’s earnings, the San Francisco Chronicle reported, citing court documents.

In denying the restaurant’s claim, AMCO allegedly said there was no physical loss or property damage and noted an exclusion in the policy for damage caused by virus or bacteria – a loophole that the insurance industry created after the SARS and MERS viral outbreaks in the early 2000s.

The complaint alleges breach of contract by AMCO and seeks a jury trial to recoup unspecified financial losses in excess of $75,000.

Across the Bay, San Francisco’s Board of Supervisors adopted a resolution on April 7 stating that the coronavirus does damage property because it adheres to surfaces and spreads. The resolution, introduced by Supervisor Gordon Mar, was created to bolster the case of city businesses seeking relief from their insurers.

“Mom and pop businesses have paid into business interruption insurance to protect them and their workers in times like these. The insurance companies must step up and honor the business interruption claims,” Mr. Mar said in a statement at the time, according to the Chronicle.

Beasley Allen lawyers are actively investigating and filing similar 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 an 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.

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