Business Owner Seeks Justice After Business Interruption Insurance Claim is Denied
Atma Beauty is a little beauty salon in Miami Beach that happens to be getting a lot of attention this week. At the beginning of the month, the salon’s owner initiated a class action lawsuit against its insurer for failing to pay for losses and expenses caused by the suspension of its business due to the COVID-19 outbreak.
Like so many business owners across Florida, the salon owner was forced to close up shop due to the COVID-19 outbreak. Local authorities have prohibited the salon owner from accessing and occupying its salon since early March 2020. Consequently, the salon owner lost out on weeks’ worth of vital income and incurred unanticipated expenses.
When the salon owner looked to its insurer to honor its business interruption insurance, the claim was denied by Lloyd’s of London’s underwriters. As a result, the salon owner has filed a class action lawsuit – individually and on behalf of “all others similarly situated” – alleged: “The class claims all derive directly from a single course of conduct by defendants: their systematic and uniform refusal to pay insureds for losses suffered due to the COVID-19 pandemic and the related actions taken by civil authorities to suspend business operations.” The lawsuit alleges that the insurer breached its insurance policy because the plaintiff’s policy does not contain any exclusion which would apply to allow defendants to deny coverage for losses caused by COVID-19. Because the policy is an all-risk policy and does not specifically exclude the losses that plaintiff has suffered, they seek a trial by jury in order to declare that the salon owner, along with other insureds, are entitled to coverage for the loss of business income and expenses resulting from the COVID-19 outbreak.
This class action lawsuit is likely to be one of many, and given the highly complex nature of insurance contracts and coverage issues, business owners would be well served to consult their attorneys about reviewing and, potentially, making claims on their business interruption policies for any business losses stemming from the COVID-19 outbreak.