A New York day care company denied business interruption coverage when it had to temporarily close during the state-mandated shutdown to slow the spread of the coronavirus (COVID-19) has filed a lawsuit against its insurer, Law360 reported. The center aims to represent a class of other childcare centers in the country that lost income when they were forced to close due to state shutdowns.

Slate Hill Daycare Center Inc., which operates two day care centers in the state, told a New York federal judge that after filing a claim with Utica National Insurance Group, the insurer indicated it would reject the center’s claim. Utica sent a uniform letter to business owner policyholders saying they didn’t have a business interruption claim and, thus, shouldn’t file one.

But Slate Hill is fighting back, saying that due to the shutdown, they cannot operate unless they are among the centers providing care to a handful of children whose parents work essential jobs. Childcare centers across the country have suffered significant business income losses as a result.

Utica claims that its policies do not cover business interruption losses unless there is physical damage to the business, such as hurricanes or fires. And, the policy specifically excludes closures due to viruses. Slate Hill claims that its policy, “explicitly covers business income loss when access to the insured’s properties is specifically prohibited by civil authority orders.”

New York Gov. Andrew Como declared a statewide “Disaster Emergency” on March 7. Less than two weeks later, he ordered the closure of all “non-essential operations” to stop the spread of the coronavirus.

Day care centers are among hundreds of businesses across the country being denied business interruption coverage by their insurance companies for loss of income caused by COVID-19-related shutdowns.

Slate Hill is represented by Arnold Levin of Levin Sedran & Berman LLP, Richard Golomb of Golomb & Hoink PC, and Daniel “Dee” Miles of Beasley Allen Crow Methvin Portis & Miles PC.

Business seeking to sue their insurers for business interruption coverage should first file a claim with their insurance company to preserve any legal claims moving forward. Attorneys with Beasley Allen Law Firm are actively pursuing these cases already with our clients who received a denial communication from their insurance companies. 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.

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