Chicago:
U.S. businesses decimated by the COVID-19 pandemic today filed federal class-action lawsuits against six insurance companies for denial of policy claims they had purchased to protect against business interruptions. The suits represent the broadest effort yet to compel insurance companies to fulfill promises made to hundreds of thousands of U.S. businesses that purchased insurance coverage to protect against precisely this situation.
The class actions are filed against Aspen American Insurance, Auto-Owners Insurance, Lloyd’s of London, Society Insurance, Oregon Mutual Insurance, and Topa Insurance Company. Initial plaintiffs include a San Diego restaurant and nightclub; a Cleveland-area bridal retailer; a Madison, Wisc. bakery and cafe; a local Minnesota chain of restaurants and bars; a St. Paul, Minn. dental practice; a Portland, Ore. restaurant; and a New York restaurant group and pizzeria.ach of the lawsuits claims that the businesses purchased special property insurance coverage to protect against business interruptions or disruptions outside of their control. These policies included business income coverage, which promises to pay for losses due to necessary suspension of operations. In all instances, these coverages either included or did not expressly or effectively exclude losses caused by viruses such as COVID-19, which caused state and municipal governments to mandate widespread business closures.
Despite these facts, the insurers have, on a broad and uniform basis, refused to uphold their contractual responsibilities for losses suffered due to COVID-19, as well as losses caused by executive orders by civil authorities and any efforts to prevent further property damage or to minimize the suspension of business and continue operations.Businesses nationwide have, for years, purchased expensive insurance policies to protect them from losses exactly like those they are currently enduring,” said Adam Levitt, co-counsel to the plaintiffs’ and a partner at DiCello Levitt Gutzler.
“For many small business owners trying to provide for their families and employees, this type of insurance coverage was an additional expense that they would have preferred not to carry but felt a responsibility to do so. For insurers to now tell them, in the most challenging of times, that the joke was on them and their policies were worthless, is unethical and abhorrent.”
Most property insurance policies sold in the United States, including those sold by the defendants, are all-risk property damage policies. These types of policies cover all risks of loss, except for risks that are expressly and specifically excluded.
“Insurers will deny almost every claim – even the most legitimate ones – because that’s just how they operate,” said Mark Lanier, co-counsel to the plaintiffs and founder of The Lanier Law Firm. “But at the end of the day, this really is a straightforward issue about honoring their agreements. As our nation emerges from this horrific pandemic, businesses of all sizes will be critical to restarting the economy. In playing their usual claim-denial games, these insurers are threatening the welfare of not only small-business owners and their families, but the entire U.S. economy.”
The plaintiffs are represented by Adam Levitt, Mark DiCello and Ken Abbarno of DiCello Levitt Gutzler LLC; Mark Lanier and Alex Brown of the Lanier Law Firm PC; Timothy Burns, Jeff Bowen, Freya Bowen and Jesse Bair of Burns Bowen Bair LLP; and Douglas Daniels of Daniels & Tredennick. They are joined by local counsel in all jurisdictions.
“Countless businesses across the United States are pinning their hopes of reopening and rehiring laid-off or furloughed employees on proceeds from insurance,” said Timothy Burns, a partner at Burns Bowen Bair LLP. “Insurance companies thrive by selling protection against maladies of all kinds. They pocket huge profits when material events are avoided but must bear the responsibility of honoring their policies on the rare occasions when these events occur. By refusing to do so, they are not running a business at all, but a large-scale rigged carnival game where no matter the scenario, the customer always loses. It’s just not right, and we will do everything in our power to ensure that these businesses are made whole.”