I am aware of two Massachusetts cases to date against insurers alleging wrongful denials of claims for business interruption losses as a result of the coronavirus pandemic.  Both have been filed in the United States District Court for the District of Massachusetts.

In the amended complaint in the first lawsuit, Legal Sea Foods, LLC v. Strathmore Ins. Co., restaurant chain Legal Sea Foods alleges that its policy issued by Strathmore Insurance Company did not have a virus exclusion — putting Legal’s a step ahead of most policyholders.

Legal’s alleges that the coronavirus caused direct physical loss or damage to its insured properties because the virus can be spread through contact with surfaces such as metal and glass used in preparing and serving the restaurant meals.  It also alleges that it is eligible for coverage for losses caused by civil authority.

According to the complaint, Strathmore denied coverage on the grounds that there was no direct physical loss or damage and that the claim was excluded by exclusions for losses caused by ordinance or law or by “acts or decisions, including the failure to act or decide, by any person, group, organization, or governmental body.”  Legal’s alleged that both exclusions are inapplicable.

The second lawsuit, Rinnigade Art Works v. The Hartford Financial Services, is a class action suit.  The named plaintiff, Rinnigade Art Works, is a graphic design and screen printing business.  Rinnigade alleges that its policy does not contain any applicable exclusions.  The complaint does not specifically discuss whether the policy contains a virus exclusion.

Like in Legal Sea Foods, Rinnigade alleges that it is entitled to coverage for business interruption losses under the policy because the coronavirus caused direct physical loss or damage and that that the state-ordered closings created a loss caused by civil authority.