Several New York restaurants and bars are suing their insurance providers for not owning up to their obligation to cover the establishments’ COVID-19-related losses and expenses.

The group of businesses includes local favorites like Ess-a-Bagel, Junior’s Cheesecake, and Smith & Wollensky steakhouse. They claim they are entitled to business interruption insurance coverage after being forced by the state to close and/or restrict operations to stop the spread of the coronavirus. However, their insurers have denied their claims.

Business interruption insurance is part of a business owner’s policy. It provides coverage of bills, payroll, and other operating expenses in the event a business has to temporarily close due to a disaster. For example, if a fire breaks out in a restaurant and it must temporarily close for repairs, the commercial property portion of their insurance plan would cover building repairs while business interruption portion of the policy would cover operating expenses until the restaurant was able to reopen.

Insurers claim that since the virus didn’t cause physical damage to the establishments, the restaurants and bars are not entitled to money for business interruption.

The restaurants and bars claim they paid a substantial premium for their policies to cover crises such as COVID-19. As part of their complaint, the businesses provided photos and diagrams showing how their floor plans were rerouted and the number of customers were reduced in order to reduce the risk of spread. Some purchased new equipment, like floor markers for social distancing and plexiglass barriers, in order to comply with state mandates. By denying the claims, the restaurants and bars say insurance companies are stiffing them in their most urgent time of need.

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 multidistrict litigation (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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