As the spread of COVID-19 decimates the nation’s restaurant industry, business owners have pored over their insurance policies with hopes of discovering a safety net, only to learn that insurers are unwilling to payout coverage for losses tied to the pandemic. Through court battles and lobbying, restaurateurs are hoping to lock insurance firms into agreements that will provide the industry’s policyholders with cash payments needed to ensure their businesses can reopen when the pandemic settles.
With restaurants putting their operations on hold indefinitely to limit the spread of coronavirus, many frustrated phone calls this past week have centered around business interruption insurance, a type of insurance policy that triggers cash payout to cover lost revenue when disasters strike and force businesses to cease operations.
Colorado restaurateur Bobby Stuckey, of the award-winning Frasca Food & Wine Group, faced these hurdles when he filed business interruption claims this week. Following the government-mandated closures of the dining areas for his bars and restaurants in Denver and Boulder, he says insurers first rejected him on the grounds that their business interruption coverage doesn’t extend to civil authority. This coverage typically applies to losses that stem from a government entity prohibiting access to an insured’s business because of damage at a nearby property. The group was rejected a second time because its policy contained a virus exclusion clause.
Already, the brawl over whether insurance firms will be on the hook for restaurants’ coronavirus coverage has entered the court system. After government-mandated closures in light of the coronavirus, the seafood restaurant Oceana Grill in New Orleans filed a lawsuit against Lloyd’s of London earlier this week, seeking a declaratory judgment that the insurer should cover related business interruption losses.