The owners of Cheers, the Boston bar made famous by the 1980s TV sitcom by the same name, is suing its insurance provider for denying COVID-19-related business interruption claims.
The lawsuit was filed by Hampshire House in U.S. District Court in Boston on July 27, to recover operating costs for Cheers and other Boston-area restaurants the corporation owns. The lawsuit accuses Fireman’s Fund Insurance and Associated Indemnity Corporation, and parent company Allianz Global Risks United States Insurance Company of breaching their business “Property Gard” policy contract when they denied the restaurants’ business interruption claims.
Business interruption insurance is part of a business owner’s policy. It provides coverage of operating expenses such as payroll and bills in the event the business has to temporarily close due to a disaster, such as a fire or hurricane. Hampshire House claims it has continued to pay six-figure premiums to its insurers for more than $10 million in business interruption coverage for its restaurants, but the providers have refused to act in good faith and pay what they promised.
The corporation owns Hampshire House, 75 Chestnut, 75 on Liberty Wharf, two Cheers locations, and a distribution center, and employs more than 290 people. Since Massachusetts ordered the shutdown of restaurants in response to the spread of the coronavirus, Hampshire House has lost “several million dollars.”
“Hampshire (like many businesses) has relied on its business interruption insurance to cover what it is supposed to cover — replacement of business income and payment of ongoing expenses in order to rebuild its business,” the lawsuit states.
Hampshire House is among hundreds of companies that have had their business interruption claims denied by their insurers but are using the law to fight back.
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.