Several strip clubs throughout the U.S. have banded together against Lloyd’s of London syndicates in a lawsuit alleging the insurers wrongfully denied their claims for business interruption losses caused by the COVID-19 pandemic and government orders to suspend or limit operations.

business closed covid 19 375x210 Lloyd’s sued by strip clubs seeking coverage for COVID 19 business interruption lossesThe lawsuit, filed in a California federal court Aug. 24 by a group of 23 strip clubs and an adult superstore, alleges Lloyd’s syndicates are asking a court to rewrite their “all risk” business interruption policy’s mold exclusion to include viruses.

Seventeen of the strip clubs in California, Florida, Pennsylvania, and other states say they lost millions of dollars when the government ordered them to shut down as COVID-19 spread and lockdown orders and social distancing policies were implemented.

Six other clubs in Iowa, Texas and Minnesota said that government orders in March forced them to restrict their operations. According to the plaintiffs, their policies provide a coverage limit of $10 million per occurrence, yet the Lloyd’s insurers have paid nothing on the claims.

While the business interruption policies define physical damage as meaning physical alteration to a property, the policyholders say this should be interpreted to include loss of possession or loss of use since the virus effectively rendered the premises unusable.

The clubs also allege that state-ordered shutdowns caused their businesses direct physical losses and that the insurance policy doesn’t exclude loss resulting from government orders.

“The policy does not contain any exclusion that applies to orders, such as the COVID-19 governmental order issued by states, such as California and other states or other government authorities that prevent the plaintiffs from continuing their business operations because of public health and safety issues,” the suit says, according to Law 360. “Accordingly, the shutdown orders constitute a covered risk.”

The lawsuit asserts that Lloyd’s is trying to use a mold exclusion to shield its syndicates from COVID-19-related claims, going so far as asking a court to rewrite the exclusion to include the concept of a virus. Even if the mold exclusion applied, the clubs say their losses were caused solely by the shutdown orders, and nowhere in the policy is there language barring coverage for government orders, they argue.

The clubs are seeking actual and compensatory damages as well as attorney fees, to be determined by a jury.

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 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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