When a group of Las Vegas restaurants apply for insurance coverage for loss of earnings due to COVID, the court must decide whether the policy is suitable.
Egg Works, a family-owned restaurant group operating in Las Vegas, has requested relief from COVID-19 losses after Nevada State Governor Steve Sisolack shut down its on-site and indoor dining at start of the pandemic.
Egg Works, which employs more than 400 people in the region, had to close its many storefront doors between March 20, 2020 and April 30, 2020.
The franchise claimed to have suffered significant financial losses after the closure. She turned to her insurer, US Specialty Insurance Company, for help.
A restaurant salvage insurance policy was issued by US Specialty in September 2019 and was in effect until September 2020. Egg Works notified US Specialty of its financial losses and demand for payment “in accordance with the terms of its police “.
Two days later, Egg Works followed up on its request with instant action, alleging that the American specialty “refused.[d] to or did not respond significantly to [Egg Works’] request.”
He further alleged that the insurer was refusing to pay and instead brought claims for breach of contract, breach of implied good faith and fair use undertaking, and declaratory judgment.
The insurance policy, US Specialty pointed out in its motion to dismiss the alleged claims, stated that under its “Insured Events” section, the insurer “will reimburse the insured for his loss in excess of the deductible … caused by or resulting from one of the following insured events.
It listed accidental contamination, malicious adulteration, product extortion and negative publicity.
Police did not mention the shutdown by government order or action, the insurer said.
Scorecard: The court allowed US Specialty Insurance Company’s motion to dismiss. No amount will be paid under the restaurant recovery insurance policy.
To take with: We are only a year from the start of the pandemic. As more businesses seek cover for lost earnings, insurers need to keep the pulse of the court system to see how these lawsuits play out. &