Posted in COVID-19 on April 17, 2020
It was bound to happen sooner or later, but changes in the legal sphere are already coming fast in the wake of COVID-19’s appearance. Oceana Grill, a prominent seafood restaurant in the French Quarter, has become the first business in America to file suit against their insurance company for a business interruption claim due to COVID-19 losses.
Oceana Grill is seeking coverage for future business losses that are attributable to COVID-19 (or response to the pandemic). The restaurant argues that its current insurance policy leaves space wide open for compensation for future losses.
Oceana Grill (“Oceana”) filed its suit against its insurance carrier on Monday, March 16. As the Plaintiff, Oceana is seeking judgment that would require Lloyd’s to provide coverage for business loss due to COVID-19. Oceana’s losses were incurred as a result of the restaurant’s recent closure, which was part of a nationwide effort to stop the spread of COVID-19.
Oceana argues that the judgment is warranted because their insurance policy (known as an “all risk” policy) did not exclude them from coverage for losses due to a virus or pandemic. The restaurant wants the court to legally affirm that:
A highlight of this case– and its ruling– involves some loopholes regarding “all risk” policies. The policies are usually only meant to account for physical property damage. This likely played a significant role in Oceana’s insistence on coverage in the event of a civil authority shutdown:
“It is clear that contamination of the insured premises by the coronavirus would be a direct physical loss needing remediation to clean the surfaces of the establishment.”
Oceana is seeking legal declaration that their insurance policy extends coverage from direct physical loss and/or from a civil authority shutdown due to a global pandemic virus. The restaurant also hopes that Government Edwards himself will testify that the order applies to them.
Some prominent legal professionals believe that lost business will not be covered under most business interruption clauses. Despite this, Oceana has opened the doors for a slew of similar establishments to fight for compensation.
Oceana’s location on the corner of Bourbon and Conti positions it in the heart of the French Quarter. The restaurant enjoyed tremendous success prior to recent restrictions banning large gatherings and forcing restaurants to close by 9 p.m. It had the space to accommodate as many as 500 guests, hosted weddings and private events, and stayed open for sixteen hours a day (from 8 a.m. to 1 a.m.) every day of the year.
Oceana Grill believes that the current restrictions in place to mitigate COVID-19’s spread have already caused significant financial loss. They don’t expect it to stop there, either. They anticipate further regulations that will continue to limit their operations and decrease their customer base. Whether those come in days, weeks, or months, the restaurant believes that they’re at serious financial risk.
Oceana’s insurance policy is known as an all-risk insurance policy. These automatically cover any risk that is not specifically excluded from coverage. Oceana argues that their policy did not explicitly exclude losses that arise due to a virus or global pandemic. Because of this, they should be legally entitled to coverage for monetary losses due to COVID-19.
This obviously is not for you– or us, or any other readers– to decide. The point is that there was no aspect of Oceana’s insurance policy that precludes the restaurant from collecting coverage for business interruption due to a global pandemic. Oceana turned to their carrier for help because the carrier offers business interruption coverage and (according to Oceana) has no reason to deny it.
If you believe that you may have a business interruption claim, be prepared to spend some time waiting. Almost every aspect of American life– from waiting in line at the grocery store to moving mail through the postal system– has slowed down. Most attorneys are working diligently to conduct consultations and support their clients, but you should know that the process can be slow to begin with:
It’s also important to note that business interruption claims are not the only opportunity for a restaurant to achieve compensation for COVID-related losses. Some other insurance policies might also provide a chance for help:
Beyond anything else, the key takeaway from Oceana’s case should be that they’re not going to be the only restaurant to pursue compensation for business loss. COVID-19 has brought plenty of small businesses to a screeching halt– and Oceana is laying the blueprints for steps that plenty of business owners will take in the near future.
If you believe that you may be in a position to file a business interruption claim due to losses stemming from COVID-19, you should contact an attorney as soon as possible. Legal professionals study and work for years to achieve their knowledge– they can help you craft a case that offers you the best chance of success.