A grilled cheese restaurant around the corner from the White House has filed a class action lawsuit against its insurance company after its coronavirus-related business interruption claim was denied.

empty fast food restaurant DC restaurant’s lawsuit seeks business interruption losses from insurersGCDC Grilled Cheese Bar on Pennsylvania Ave. in Washington DC filed the lawsuit against Hartford Financial Services Group and Sentinel Insurance Company alleging the companies wrongfully denied its claim for economic losses caused by shutdowns ordered by the government to curb the spread of coronavirus.

The coronavirus pandemic has triggered a major dispute between insurance companies and policyholders with business interruption coverage – a battle that “promises to test the limits of many insurance policies,” according to NPR.

Insurance companies started writing virus exclusions into their policy language in 2006, after the SARS outbreak threatened to force the closure of businesses in the U.S.

Hartford and Sentinel denied GCDC’s claim because the restaurant failed to identify a “direct physical loss” to its property, the lawsuit states. The insurers also argue that the city’s order to halt dine-in services wasn’t issued in direct response to a “covered cause of loss to property in the immediate area,” such as a nearby fire, flood, or similar event.

Yet GCDC and many other companies filing business interruption lawsuits argue that such exclusions aren’t clearly defined in the language of the policy.

According to NPR, GCDC’s lawsuit says the language in Hartford’s policy is “indecipherable.”

“Had [GCDC’s insurers] wanted to exclude the risks of a pandemic — and the necessary public health counter-measures that would mandate business closures and population-wide social distancing — they should have done so plainly, as they did with numerous other risks,” the complaint says, according to NPR. “But they did not.”

As a result, companies that have been paying for business interruption coverage for years have been caught off guard by the insurance industry’s blanket denial of claims in the middle of the coronavirus pandemic.

While several members of the House and Senate have been hammering out bills and pressuring the insurance industry to cover their customers’ coronavirus-related claims, juts steps away from GCDC’s doors, it remains to be seen how the U.S. courts will respond to the business interruption lawsuits.

“The pandemic has revealed a serious business interruption risk which many had not thought to prepare for or insure against,” according to Risk & Insurance. “As claims roll in, BI policy language is likely to go through review and revision. More specific wording addressing communicable disease risk will likely be added to standard policies.”

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