Judge Orders Insurer To Pay Restaurant For COVID Losses

A North Carolina judge has ruled that an insurance company that sold business interruption coverage to the owners of two high-profile restaurant groups in the state must reverse course and pay claims stemming from pandemic-related closures.

WRAL television reported that after Cincinnati Insurance Company refused to pay claims stemming from COVID-19, the restaurant owners’ lawsuit sought “payment for lost business income, extra expenses, and other business related losses in light of COVID-19 and the related actions by governmental authorities requiring closure of their covered business premises.”

Restauranteur Matt Kelly told the station: “It’s quite simple from our end. We pay the insurance premium, and, you know, when you pay your insurance premium and this is your expectation and this is how your policy reads, they have to live up to their end of the deal.”

Giorgios Bakatsias, another restaurateur seeking payment through the suit, told the station: “At some point, you pay for certain support, and that’s all we’re asking. We’re not trying to be — we don’t want anything for free. We want to make sure we get what we invest in.”

A spokesman for Cincinnati Insurance reportedly told the station in a written statement: “We continue to believe that business interruption coverage under our property policy in this case does not apply because there was no structural alteration to property. The prevailing view by courts around the country has been that an economic loss alone doesn’t qualify as direct physical damage or loss to property, which is the trigger for business interruption coverage.”

The television station quoted a letter from North Carolina Insurance Commissioner Mike Causey earlier this year in which he reportedly wrote: “Standard business interruption policies are not designed to provide coverage for viruses, diseases, or pandemic-related losses because of the magnitude of the potential losses. Insurability requires that loss events are due to chance and that potential losses are not too heavily concentrated or catastrophic. This is not possible if everyone in the risk pool is subject to the same loss at the same time.”

“We can’t legally force insurers to cover a risk which they didn’t intend to cover and which, in some instances, was specifically excluded in the policy,” Causey added.

WRAL’s report did not include details of the ruling in favor of the restaurant owners.