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ABA Report: COVID-19 Prompts a Wave of Business Interruption Claims from Restaurants


The restaurant industry has been hit hard by the COVID-19 pandemic and the resulting government shutdowns. Many of the restaurants that have moved to “carry-out only” services have reported a sharp decline in their revenue, while some other restaurants have been closed altogether during the outbreak.

Business interruption insurance provides protection for companies that are unable to operate—but, for many reasons, the coverage does not always apply in pandemics. According to a report from the ABA Journal, the first wave of business interruption lawsuits from restaurants is currently hitting the courts. Here, our Florida business litigation attorneys highlight key takeaways from the article.

  1. Many Business Interruption Claims from Restaurants Have Been Denied

The ABA Journal story explains that many restaurants have had their initial business interruption claims denied by the insurance company. It is an issue that is happening all across the United States—the report cites restaurants from Chicago to South Florida. Notably, some business interruption policies contain explicit exclusions for damages caused by “viruses” and “pandemics”. However, that is not always the case. Many policies are simply silent on the matter. 

  1. Not All Policies Exclude Viruses or Pandemics—Questions Linger

Even when insurance policies contain no express exclusions for viruses, many restaurants report that their COVID-19 related business interruption claims are being denied. For the most part, insurance companies are relying on a “physical damage” requirement in the standard policy language.

The insurance companies are arguing that a virus is not “physical damage” and, therefore, coverage does not apply. There are serious questions being raised about this defense. As an insurance attorney explains in the article, the coronavirus is made up of microscopic physical particles. You cannot see them, but they are there. Litigation is already started on this issue.  

  1. State and Local Shutdowns are Another Key Issue: Civil Authority Coverage

A secondary matter is that many restaurants closed or scaled-back business because of orders from state and local governments. Some of these companies may have been only lightly affected by the virus itself. If a business interruption policy contains ‘civil authority coverage’, they argue that their losses should be compensated on those grounds. Closures related to a state or local public health order may be covered under such a policy.

Bottom Line for Restaurants in Florida: If you have business interruption insurance, you should not assume that you are prevented from bringing a claim—especially if your policy is silent on viruses and pandemics or you have civil authority coverage. COVID-19 is complicated and many issues are still being litigated. A lawyer can help you understand your rights and options.

Call Our South Florida Business interruption Attorneys Today

At Pike & Lustig, LLP, our West Palm Beach business litigation lawyers are skilled, experienced advocates for clients. If you have questions or concerns about making a business interruption claim, we can help. Call us now for a confidential review of your case. We represent clients throughout the region, including in Miami, West Palm Beach, Hialeah, Jupiter, Parkland, Boca Raton, and Coral Gables.




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