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Law360 (April 28, 2020, 5:53 PM EDT ) A Florida beauty salon hit insurer HDI Global Specialty SE with a proposed class suit on Monday over the insurer's alleged failure to cover losses and expenses the business incurred after it was forced to shutter due to the coronavirus pandemic.
Atma Beauty, a full-service salon and spa in Miami Beach, said the losses caused by the COVID-19 pandemic should be covered under its property insurance policy with HDI Global, which includes business interruption coverage.
The salon has been shuttered since the March 19 order from Miami-Dade County that forced all nonessential businesses, including salons, to close in an effort to curb the spread of the coronavirus, the suit noted.
"Under the policy, defendants promised to cover these losses and expenses, and are obligated to pay for them," the salon said. "But in blatant breach of their contractual obligations, defendants have failed to pay for these losses and expenses."
Atma said that in addition to the business interruption coverage, the policy includes "extra expense" coverage through which the insurer promised to pay expenses incurred to minimize the suspension of business. The policy also includes "civil authority" coverage to pay for loss of business income due to government actions prohibiting access to the business, the complaint said.
Atma added that though the Insurance Services Office, a company that drafts standard policy language for use in insurance contracts, stated in 2006 that claims for business interruption losses caused by viruses or bacteria are not covered, HDI Global chose not to include this language in Atma's policy, which contains some standardized forms drafted by the ISO. Since the 2006 statement, other insurers have chosen to incorporate the virus exclusion into policies, according to the suit.
"Plaintiff's 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," Atma said.
Atma wants to represent a nationwide class of businesses with similar policies who have also been denied business interruption coverage by HDI Global.
Steven Marks, who represents Atma, said the beauty salon bought "one of the clearest commercial insurance policies written by any provider in the world." He said the salon paid a higher premium for an all-risk policy, which provides coverage for all risks of loss that are not specifically excluded in the policy.
"As a result of the coronavirus, the salon has completely shut down and has had no means of revenue," Marks said. "If insurers continue failing to fulfill their contractual obligations, then the impacts on our economy will become even more dire."
A representative for HDI Global declined to comment.
Atma is represented by Aaron S. Podhurst, Steven C. Marks, Lea P. Bucciero, Matthew P. Weinshall and Kristina M. Infante of Podhurst Orseck PA.
Counsel information for the defendants was not immediately available.
The case is Atma Beauty Inc. et al. v. HDI Global Specialty SE et al., case number 1:20-cv-21745, in the U.S. District Court for the Southern District of Florida.
--Editing by Daniel King.
Update: This story has been updated to include comments from the parties.
For a reprint of this article, please contact reprints@law360.com.
