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Chubb faces COVID-19 business interruption suits


Restaurants in Florida and New Jersey filed class-action lawsuits against Chubb Ltd. in federal court on Monday seeking coverage for coronavirus-related lost business income.

The lawsuits follow a wave a legal action by numerous small businesses seeking declaratory rulings that their business interruption coverage is triggered by government-mandated shutdowns. Several of the suits also seek class-action status. More recently, Travelers Cos. Inc. hit back against one of its policyholders Monday with a countersuit seeking a ruling that coverage is barred.

In the New Jersey case against Chubb, Truhaven Enterprises Inc. d/b/a Fiorino Ristorante v. Chubb Ltd., the Summit, New Jersey-based restaurant notes that its policy has an exclusion for loss or damage caused by a virus or bacteria. It argues, however, that the loss of use of its property was caused by a compulsory closure, which should constitute a direct physical loss that triggers business interruption coverage.

“If Chubb had wished to exclude from coverage as ‘physical loss or damage’ loss of use of property that has not been physically altered, it could have used explicit language stating such a definition of ‘physical loss or damage,’” court papers say.

In the Florida case, Cafe International Holding Co. LLC v Chubb Ltd., the owner of the IT Italy restaurant in Fort Lauderdale, Florida, said it had a policy with a Chubb surplus lines unit Westchester Surplus Lines Insurance Co. that does not include the Insurance Services Office Inc. virus exclusion, which was introduced in 2006 and is common in property policies.

The policy “does not contain any exclusion which would apply to allow Defendants to deny coverage for losses caused by COVID-19 and related actions of civil authorities taken in response to COVID-19,” the suit states. “Accordingly, because the Policy is an all-risk policy and does not specifically exclude the losses that Plaintiff has suffered, those losses are covered.”

A Chubb spokesman said the insurer does not comment on pending legal matters.

More insurance and risk management news on the coronavirus crisis here