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Famed Chicago Restaurant Pushes the Covid-19 Coverage Envelope in New Class Action

April 22, 2020

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<p style="text-align: justify;">A famous Chicago restaurant chain, Billy Goat Tavern, filed a class-action <em><a href="Billy%20Goat%20Tavern%20v.%20Society%20Insurance.pdf">lawsuit</a> </em>against their insurer, Society Insurance, for wrongfully denied business income coverage due to the Coronavirus crisis.  The original Billy Goat tavern became nationally known for inspiring the 1978 Saturday Night Live sketch “Olympia Café”.  While there has already been a flood of Coronavirus related litigation over business interruption insurance, this lawsuit presents a relatively new argument: that the virus itself poses a direct physical loss to the restaurant properties.</p>
<p style="text-align: justify;">The complaint, filed March 31 in the Northern District of Illinois, alleges that Society Insurance breached their contract by denying coverage on the basis that they have not suffered a "direct physical loss" to their properties due to Illinois' mandatory shutdown order.  The plaintiff’s "all-risk" policy has a businessowners special property coverage form, which provides coverage for any "direct physical loss of or damage to covered property" that is caused by any "covered cause of loss." According to the complaint, the form does not define the term "direct physical loss.”  The plaintiffs now allege that the coverage denial is unlawful because COVID-19 rendered their covered properties "unsafe and inaccessible for dine-in customers."  In other words, the complaint alleges that the cause of loss is not merely the statewide shutdown order but the virus itself.</p>
<p style="text-align: justify;">This case represents an early test of whether the looming risk of coronavirus transmission counts as a direct physical loss. The ultimate outcome of this argument will have a major impact for both businesses and insurers.</p>
Thanks to Andrew Debter for his contribution to this post.  Please email <a href="mailto:gcoats@wcmlaw.com">Georgia Coats</a> with any questions.

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