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The Legal Sea Foods LLC restaurant chain filed a breach of contract suit against its insurer Monday for refusing to pay business interruption expenses in connection with the coronavirus pandemic, stating even though its policy was issued in March, when the pandemic was already widely acknowledged, it did not include a virus exclusion.
New York-based Strathmore Insurance Co., a unit of the Greater New York Group, denied coverage to the 34-restaurant Boston-based chain, stating it was not obligated to provide coverage because the chain’s suspension of operations was not caused by direct physical loss or damage, according to a letter included as an exhibit to the complaint in Legal Sea Foods LLC v Strathmore Insurance Co. The lawsuit was filed in U.S. District Court in Boston.
Legal Sea Foods’ policy, effective, March 1, provides business income and extra expense insurance coverage for its designated premises, subject to a blanket limit of $94,852,397, according to the complaint.
The complaint states that despite knowing when the policy become effective, businesses around the world were being shuttered because of the virus’ presence and spread, “Strathmore sold this policy to Legal Sea Foods without any virus or pandemic exclusion or limitation whatsoever in exchange for a substantial premium, even though such exclusions are in use throughout the insurance industry.”
It states Legal Sea Foods is no longer permitted to operate its dining room and is restricted to carry out or delivery services under stay-at-home orders. The chain operates restaurants in Massachusetts, the District of Columbia, New Jersey, Pennsylvania, Rhode Island and Virginia.
Thomas D. Hughes, the insurer’s executive vice president, general counsel and corporate secretary, said, “We don’t comment on pending litigation.”
Last week, a Kansas City, Missouri, barbecue restaurant seeking coverage for coronavirus-related losses filed suit against its insurer, retail broker and wholesaler.
More insurance and risk management news on the coronavirus crisis here.
Hiscox Ltd. said in a statement Wednesday that its “core policy wordings” for U.K. businesses do not cover most business interruption claims related to the coronavirus pandemic.