If At First You Don't Succeed . . .
Despite the failures of the first few lawsuits (so far) to force insurance carriers to cover business interruptions related to the COVID-19 shut downs, the fight continues. The latest barrage comes from a group of 50 New York area restaurants, cafes, and bagel shops suing more than 27 insurance carriers for the denial of their business interruption claims.
The attorneys in this case are making a novel argument:
The restaurants argue that they are owed coverage under all-risk commercial property policies issued by the various insurers for income lost and extra expenses incurred during forced closures and restricted reopening during the COVID-19 pandemic.
Among other things, government-imposed restrictions required the restaurants to make physical alterations when they reopened, the suit alleges.
“They had to physically manipulate tables, chairs, and other equipment into less functional arrangements; install plexiglass or other makeshift barriers to prevent congregation; place markers on the floor or walls to indicate six-feet of separation; and redesign routes for entrance and exit,” the suit states.
In addition, the restrictions limit the number of customers who can be served, the suit states.
The insurers denied claims on the grounds that the policies require “direct physical loss of” or “damage to” the restaurants to trigger business interruption coverage, the suit states.
“But there is no language in any of the Policies requiring this narrow construction. Under any reasonable interpretation, the terms ‘direct physical loss of’ or ‘damage to’ property are much broader and would include detrimental physical effects, like those caused by the Shutdown and Partial Reopening Executive Orders,” court papers say.
Hmmmm. So, the alterations to the physical plant - presumably meaning reduction of table space, plexiglass screens, etc. establishes the "direct physical loss?" That seems like a steep road to climb, but it's got novelty going for it. We will continue to monitor the results of these lawsuits and other similar suits.