What insurance companies do over the coming weeks in response to the COVID-19 pandemic is going to matter a lot to restaurants all across the country. Will insurance companies pay the claims, or will insurers use this this historically unprecedented situation as a way to poke holes in their customers’ coverage? (I’m betting on the latter.)
This question is of supreme importance to downtown Nashville, where the downtown honky tonks and restaurants stay jam packed 7 nights a week.
Except for, of course, the past 4 weeks.
Today, one of the downtown bars filed a lawsuit (full copy here: COVID Insurance lawsuit) against Nationwide Property and Casualty Insurance Company, challenging the denial of a coronavirus-related claim. The plaintiff is Nashville Undergound, described as “a seven-story restaurant, bar, nightclub and live music venue” and exactly the type of place that has never, ever practiced social distancing.
The lawsuit alleges that Nationwide denied the claim by citing policy “exclusions” for losses related to bacteria or virus and by arguing that there was no physical damage or physical loss to the restaurant. These are exactly the arguments that I told you they’d be making.
This will be interesting to watch, and, of course, this lawsuit will be the first of many just like it. (Another free prediction? This will nearly instantly be removed to federal court.)
For more background, this article, titled Opposite Sides of the Table: Restaurants Seek Recovery From Insurers for Business Interruption in the Wake of COVID-19, has a really good and comprehensive recap of the insurance issues facing restaurants.
“According to restaurant.org, since March 1, the industry has lost more than 3 million jobs and $25 billion in sales, and roughly 50% of restaurant operators anticipate additional layoffs in April. The National Restaurant Association has predicted that the industry will suffer $225 billion in losses in the next few months, forcing the elimination of as many as 7 million industry jobs.”
Creditors Rights 101 