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Law360 (June 3, 2021, 5:44 PM EDT ) Twenty-five owners of popular Chicago-area restaurants including Buffalo Wild Wings and Jack Gibbons Gardens have sued Society Insurance, alleging the carrier must cover their revenue losses caused by COVID-19 and government shutdown orders.
The bar and restaurant franchisees told an Illinois federal judge on Wednesday that Society has wrongfully denied coverage of their pandemic-related losses and failed to properly investigate their insurance claims.
The more than a dozen owners say their all-risk business owner policies do not contain a virus exclusion, so Society has no reason to deny coverage of their losses. The operators allege Society misrepresented its insurance policies to policyholders, citing a March 27, 2020, letter from Society CEO Rick W. Parks that stated Society's insurance policies have a "pandemic events" exclusion when, in fact, their policies do not contain such exclusions.
COVID-19 caused "a direct physical loss of or damage to" their properties because the airborne virus can stay on a property surface for days, making the property unsuitable to use as intended, the owners say.
The policies never defined "direct physical loss or damage," a precondition for coverage, but the pandemic and government orders have imposed such damage to their restaurants which forced them to suspend operations in March 2020, the operators say.
The bar and grill franchisees say the policies expressly cover the suspension of business operations they say they experienced. Their bars also incurred extra expenses from purchasing cleaning products, disinfecting property surfaces, and rearranging outdoor dining equipment to ensure proper social distancing, they say.
The owners are alleging breach of the insurance contract and seeking a declaration that their restaurants suffered direct physical loss or damage to their properties as a result of COVID-19 and government closure orders. They also are asking the court to hold that Society is obligated to reimburse their lost business income and extra expenses incurred during the pandemic.
Representatives for the parties could not be immediately reached for comment on Thursday.
The owners are represented by Robert R. Duncan and James Henry Podolny of Duncan Law Group LLC.
Counsel information for Society was not immediately available.
The case is 952-6 W. Addison Inc. et al. v. Society Insurance, case number: 1:21-cv-02964, in the U.S. District Court for the Northern District of Illinois.
--Editing by Janice Carter Brown.
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