An insurance company that rejected clients’ business interruption claims based on losses caused by state-mandated closures to stop the spread of COVID-19 urged a Wisconsin federal judge to toss a proposed class action lawsuit filed by restaurants and bars, Law360 reported.
Society Insurance’s reasoning: the businesses didn’t completely shutter during the shutdowns because they remained open for takeout service. Furthermore, the restaurants and bars suffered no physical damage from the coronavirus, and thus, their claims don’t qualify for coverage under their policies, the insurer claims.
Six restaurants and bars in Wisconsin, Minnesota and Tennessee hit Society with the proposed class action over breach of contract for refusing to cover losses amid the COVID-19 pandemic. Society is one of several insurers across the country facing heat for refusing to cover business interruption claims.
Business interruption insurance is part of a business owner’s policy. It serves as a lifeline in the event of a disaster. If a business is forced to temporarily close due to a fire, tornado or other disaster, their business interruption insurance provides funds that cover payroll, bills and other operating expenses until the business can reopen.
Restaurants and bars across the country were ordered by states and local governments to close down indoor dining to slow the spread of COVID-19. Most were allowed to scale back operations considerably and offer takeout service. The loss of income left many small and mid-sized businesses struggling. They turned to their insurers looking for a lifeline, only to be rejected despite paying on their business interruption insurance for years or sometimes decades.
Many businesses are fighting back, filing lawsuits against their insurance companies. Some lawmakers have shown their support by threatening to force insurers to cover the losses.
Beasley Allen is actively pursuing cases with clients whose insurance companies denied their business interruption claims. 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.