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Chicago restaurants, theaters sue for coronavirus coverage


A group of Chicago-based restaurants and movie theaters sued their insurer in federal court Friday seeking coverage for lost revenue due to forced closures during the coronavirus pandemic.

The policyholders argue that their coverage with Society Insurance Co., a specialty mutual insurer in Fond du Lac, Wisconsin, includes business interruption cover for revenue lost due to government-ordered closures and that the policies do not exclude infectious disease coverage, among other things.

The suit filed in U.S. District Court for the Northern District of Illinois in Chicago follows state court lawsuits filed by restaurants in New Orleans and California and casinos in Oklahoma seeking business interruption coverage for losses during the pandemic.

Since the onset of the pandemic in the United States, several insurance organizations and attorneys have asserted that most standard property insurance and business interruption policies exclude losses stemming from infectious diseases.

In the federal suit filed in Chicago, Big Onion Tavern Group LLC et al v. Society Insurance Inc., a dozen restaurant and movie theater groups are seeking a declaratory ruling that their insurance policies cover what they expect to be more than $10 million in losses during their government-ordered closure during the pandemic. On March 20, Illinois ordered the closure of all nonessential businesses in the state.

“Upon receipt of the Closure Order Claims, Society Insurance immediately denied the claims (either verbally or through cursory emails) without conducting any investigation, let alone a ‘reasonable investigation based on all available information’ as required under Illinois law,” the suit states.

The continuous presence of the coronavirus “on or around” the policyholders’ premises constitutes physical damage, which triggers business interruption coverage under the policies, the suit says.

In addition, Society Insurance’s policies do not include an infectious disease exclusion, the suit says.

“If Society Insurance had wanted to exclude pandemic-related losses under the Plaintiffs’ policies — as many other insurers have done in other policies — it easily could have attempted to do so on the front-end with an express exclusion,” the suit says.

A spokeswoman for Society Insurance said in an email: “Society does not comment on ongoing litigation.  We look forward to a favorable resolution of this situation in the near future.”

More insurance and risk management news on the coronavirus crisis here.