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Insurers prevail in ‘Cheers’ COVID-19 business interruption case

Posted On: Sep. 1, 2021 2:55 PM CST


The company that operates the bar that inspired the TV show “Cheers” has lost its lawsuit seeking COVID-19 business interruption coverage.

As with other cases, the U.S. District Court in Boston denied the coverage to Boston-based Hampshire House Corp. in litigation it filed against Allianz  SE units on the basis it had not alleged “direct physical loss of or damage to property” at its four locations, according to the Aug. 26 ruling in Hampshire House Corp. v. Fireman’s Fund Insurance Co. et al.

Hampshire’s locations include the Cheers restaurant on Beacon Hill in Boston, which, when it operated under its previous name of the Bull & Finch Bar, inspired the TV series, according to the bar’s web site.

To state a claim under its policy’s business income and extra expense provisions. Hampshire must allege “direct physical loss of or damage to property” at its four locations, the ruling said.

“The Court must first consider the plain meaning of the policy language,” it said. There “must be a ‘physical’ loss or damage to a tangible object, such as the structure of a building,” it said.

Courts in Massachusetts have adopted that interpretation when considering insurance claims for losses due to the COVID-19 pandemic, the ruling said, citing decisions including the March ruling in Legal Sea Foods, LLC v. Strathmore Ins. Co., the decision said.

“Hampshire contends that either the actual presence of COVID-19 at their properties or the threat of COVID-19” caused loss or damage to its properties, but “‘presumed or imminent threat of contamination’ has no physical effect on the property,” it said in its ruling granting the insurers’ motion to dismiss the case.

A Hampshire attorney said the company planned to appeal. Allianz attorneys did not respond to requests for comment.

Earlier this week, in what is apparently the third federal appeals court ruling on the issue, the 11th U.S. Circuit Court of Appeals in Atlanta ruled against a dental practice in a COVID-19 business interruption lawsuit.