A Chicago tavern that was closed since
March 16 due to the COVID-19 outbreak in Illinois filed a lawsuit
this week against an insurance company for refusing to pay out a
claim under the tavern’s “business interruption” policy.
Attorneys for Maillard Tavern said
during a video news conference April 15 that the actions by
Wisconsin-based Society Insurance are part of a pattern by insurance
companies nationwide of denying any and all such claims and arguing
the policies do not cover business losses caused by a pandemic.
“Maillard Tavern made a claim.
Society Insurance Co. denied it, although they accepted the premium
payment for it,” Antonio Romanucci, one of the attorneys handling
the case, said. “Instead, the insurance industry as a whole is
blanketly refusing to honor business interruption claims.”
The suit, filed in Cook County Circuit
Court, seeks an unspecified amount of damages to be determined by an
appraisal, and it asks the court to appoint an independent “umpire”
if appraisers from the two sides cannot agree on an amount.
The case is the first one of its type
in Illinois stemming from the COVID-19 outbreak, but attorneys said
they expect there will be many more, and there have been similar
suits filed in other states.
Business interruption policies are a
standard type of business insurance that provide coverage when a
business is forced to close, or its operations are severely limited,
through no fault of the business. Many policies exclude certain types
of events, including pandemics, but attorneys for Maillard Tavern say
the company’s policy was an “all-risk” policy with no
exclusions.
The lawsuit is just one illustration of
the staggering economic losses being felt throughout the country as a
result of the pandemic, and the issue of insurance company liability
already reached the highest levels of the federal government.
On April 2, several insurance groups
signed
a letter to members of Congress estimating total losses just for
small businesses with 100 or fewer employees could range between $220
billion and $383 billion per month, while total reserves held by all
U.S. home, auto and business insurers combined was only about $800
billion.
“Standard commercial insurance
policies offer coverage and protection against a wide range of risks
and threats and are vetted and approved by state regulators,” the
letter stated. “Insurance coverage works by spreading risk, but
that model simply cannot account for a situation in which losses are
catastrophic and nearly universal. Standard business interruption
policies do not, and were not designed to, provide coverage against
communicable diseases such as COVID-19, and as such, were not
actuarially priced to do so.”
But the issue gained even more traction
on Friday, April 10, when President Donald Trump spoke about it
during an extended news conference. The president said he believed
insurance companies should have to pay the claims. Soon after those
comments, seven Republican senators wrote
to Trump arguing business interruption policies do not typically
cover losses from a pandemic absent a specific rider to that effect
and warning him of the possible consequences if insurance companies
were forced to cover such losses retroactively.
“Adding
another point of stress during these times, this would likely put our
businesses in an even worse position — draining the U.S. insurance
reserves to pay these claims could leave us in a position of having
inadequate reserves to cover claims that are actually intended to be
covered, such as damage from wind, fire, hail and other covered
perils,” the senators wrote.
Romanucci,
however, rejected the argument that the insurance industry could be
crippled by the volume of claims and that they couldn’t have
foreseen the possibility of a pandemic.
“We’re
not going to bankrupt the industry,” he said. “The industry has
the money. They just won’t tell us how much money they have. They
wrote this policy with their attorneys. They understood the
provisions of the policy if there was indeed a pandemic. That’s why
some insurance policies exclude for pandemics. So, for them to say
they didn’t know, I think, is false information.”
The case is scheduled for an initial
hearing Aug. 13.
Contact Peter
Hancock at phancock@capitolnewsillinois.com.
This article appears in Pandemic rocks the capital city.
