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Chicago Area Businesses File Suit for Denied Business Interruption Claims

March 31, 2020 Coverage News

Chicago, Illinois – March 27, 2020:  Owners and operators of restaurants and movie theaters located in Chicago and its surrounding suburbs filed a claim in the United States District Court for the Northern District of Illinois, Eastern Division, alleging that Society Insurance, Inc. is legally obligated to indemnify them from business income lost when plaintiffs were forced to cease operations in response to the COVID-19 pandemic.  The plaintiffs seek (1) a declaration that Society is legally obligated to pay the lost business income plaintiffs sustained after they were ordered to cease operations due to the COVID-19 pandemic, (2) that Society Insurance breached the terms of its policies by denying coverage for plaintiffs’ lost business income, and (3) a statutory claim for bad faith denial of insurance benefits under 215 ILCS 5/155.

According to the Complaint, Society Insurance agreed to indemnify plaintiffs from loss resulting from occurrences, including the “necessary suspension” of business operations at any insured location caused by a government order that occurs during the policy period.  Plaintiffs further allege that Society Insurance agreed to pay for business income losses “caused by action of civil authority that prohibits access to” the plaintiffs’ insured premises. Notably, the Society Insurance policies allegedly do not exclude coverage for loss caused by a virus.

Plaintiffs allege Society Insurance’s duty to indemnify was triggered when Illinois Governor Pritzker issued an executive order that required all bars, restaurants, and movie theaters to cease operations from March 16, 2020 through March 30, 2020.  Society Insurance allegedly denied coverage on the grounds the “actual or alleged presence of coronavirus” does not constitute a “direct physical loss.” Plaintiffs contend that Illinois courts have determined the presence of a dangerous substance in property constitutes “physical loss or damage” and that Society Insurance breached the Illinois bad faith statute, 215 ILCS 5/155, by denying their claims without conducting an investigation.