It was recently reported that a restaurant in New Orleans, Oceana Grill, just filed an interesting lawsuit. The restaurant’s in-housing dining has been closed due to the COVID-19 pandemic. It is trying to compel its insurance company to cover associated losses.
The restaurant seeks a declaratory judgment. A declaratory judgment in this case is basically a court determination that there is coverage under the policy. So the restaurant is asking the Court determine that its insurance policy requires the insurer to cover lost income because the restaurant is closed.
Because governments have been ordering restaurants and bars to close in-house service as part of social distancing efforts, restaurants and other businesses have lost income. Some insurance policies provide coverage for lost profits or income under certain circumstances. Business interruption coverage is one example.
Allstate explains that “Business interruption insurance helps replace lost income and pay for extra expenses when a business is affected by a covered peril. Business interruption coverage (sometimes called business income coverage) is typically part of a business owners insurance policy.” Here, the New Orleans restaurant Oceana is asking the Court to determine that its policy with Lloyd’s of London covers lost revenue “due to civil-authority actions with coronavirus restrictions.”
Insurance is ubiquitous. Almost all of us have some form of insurance. Health insurance, homeowners’ insurance, renters’ insurance, vehicle insurance. Insurance is an ever-present aspect of lives that we often take for granted, until we need it. We pay periodic premiums and hope we never need it. When we do need it, however, we hope we’re in “good hands” and that the insurance company will be there, like a good neighbor. Unfortunately, that is not always the case.
Sometimes we think our insurance policy will cover certain losses, but the insurance company denies the claim. They rely on exclusions – exceptions to coverage based on the circumstances. They construe the coverage language in such a way to exclude coverage in a particular situation. When that happens, litigation may be necessary. Speak to an attorney at KBA if an insurance company has denied your business coverage under one of its policies.
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