Legal Sea Foods suing insurer for denying COVID-19 business losses

by
editorial staff

American seafood restaurant chain says Strathmore Insurance Co is denying its claim. CEO is amongst the first high profile restauranters to fight for payment of coronavirus insurance claims.

On Monday, Boston-headquartered Legal Sea Foods filed a breach of contract suit against the insurer which denied coverage to the 34-restaurant chain, reports the Boston Globe.

The lawsuit alleges that Strathmore Insurance Co, a unit of the Greater New York Group, rejected its damages claim twice for business losses after it had to close its restaurants down due to the coronavirus pandemic. The seafood chain claims that the “all risks” policy should cover losses.

According to the suit, Legal Sea Foods’ policy with Strathmore, which is capped at USD 94.8 million and took effect March 1, does not contain a virus or pandemic exclusion. But Legal said it signed the policy on March 1, a week and a half before the World Health Organization officially declared the coronavirus a pandemic on the 11th of March.

“Strathmore sold this policy to Legal Sea Foods without any virus or pandemic exclusion or limitation whatsoever in exchange for a substantial premium, even though such exclusions are in use throughout the insurance industry,” the complaint alleges.

Berkowitz said the insurance money would help Legal pay its staff (who are all furloughed) and its vendors.

Without a pandemic exclusion, “a reasonable and prudent business person like Roger would infer that the policy would cover these losses,” Harry Manion told Boston Globe, the Boston-based partner at Hunton Andrews Kurth, who is representing the seafood restaurant chain.

Pre-COVID, the restaurant chain usually served fresh salmon sourced from the Faroe Islands, Scotland, Norway and Canada.

To date, counsel has not yet appeared for the defendant, reported Law.com.

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