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16 n e w h a v e n B I Z | M a y 2 0 2 1 | n e w h a v e n b i z . c o m Business, Interrupted Insurance claims oen denied for pandemic-related business closures F O C U S : L a w A er Lenny & Joe's Fish Tale restaurant in New Haven sued its insurance pro- vider for refusing to pay for business losses related to the coronavirus pandemic shutdown, a federal judge dismissed the case within just six months. U.S. District Court Judge Michael Shea in December granted AmGUARD Insurance Co.'s motion to dismiss the case, conclud- ing the restaurant's insurance policy's virus exclusion meant any losses due to the pan- demic weren't covered. Like Lenny & Joe's, an array of business- es, from restaurants to manufacturers and medical providers, have experienced pan- demic-related losses in the past year, and several have turned to the courts when their insurance carriers denied coverage. Business owners paid for insurance, imagining that future catastrophes would be covered. However, the insurance industry has prevailed in most cases, successfully arguing that pandemic-related losses aren't covered under most policies. Out of the 244 business interruption cases ruled on in federal court as of late April, 201 cases, or 82%, had been dismissed with prejudice, according to a COVID coverage litigation tracker run by the University of Pennsylvania Carey Law School. According to legal experts, many busi- nesses face an uphill battle when trying to get insurance companies to cover pan- demic-related losses, as standard business By Michelle Tuccitto Sullo interruption coverage typically doesn't cover a virus or pandemic. Gov. Ned Lamont in March 2020 ordered non-essential businesses, including restau- rants, to close due to the virus. Lamont recently announced the state will li all pandemic-related restrictions as of May 19. Businesses globally have suffered due to the pandemic. e former Lenny & Joe's restaurant in New Haven, whose owner LJ New Haven LLC filed the lawsuit, shuttered in October. e owners at the time cited an expiring lease and continued fallout from COVID-19. Two other Lenny & Joe's restau- rants, which have different owners, are still in business in Madison and Westbrook. Attorney Christopher M. Barrett with experienced physical loss to their property." "Most policies also contain a virus exclu- sion," Menapace added. Menapace noted there are insurance companies selling coverage for viruses and pandemics. "e standard property insurance policy was never intended to cover these types of losses," Menapace said. Jimi Grande, senior vice president of gov- ernment affairs for the National Association of Mutual Insurance Companies (NAMIC), said the insurance industry couldn't have survived if it had to cover all business inter- ruption claims for the pandemic. "e trillions of dollars spent by the federal government to keep some semblance of the economy afloat through the past year, with many businesses still unable to survive, has shown that the costs of a pandemic cannot be borne by property/casualty insurers or any other single industry," Grande said. "Insurers have long excluded virus-related losses from standard business interruption policies for exactly that reason, and courts across the country have recognized that." Physical loss e Connecticut Insurance Department started getting complaints early in the pandemic from policyholders about their business interruption policy claims not being paid, according to agency spokesman Jim Carson. As of late April, the department had received 30 pandemic-related business inter- ruption complaints. Carson said some insurers specifically excluded epidemics and pandemics from policies following the SARS outbreak of 2003. e department has been advising con- sumers that business interruption policies are governed by contract law and vary between insurance companies and individu- al businesses, so business owners should re- view policies and consult with their brokers and carriers. According to the department, losses not listed in a policy are typically not covered for risks that "are too great to be underwritten at an affordable price," such as war, nucle- ar attack, radiation or a global pandemic. Having to cover claims at such a large scale could cause insurance carriers to go out of business. Attorney Ann Rubin of the law firm Carmody Torrance Sandak & Hennessey in the West Hartford law firm of Izard Kindall & Raabe, who represented the New Haven restaurant, described the pandemic's impact as "catastrophic." e lawsuit asserted that any virus exclusion shouldn't have applied, because their losses weren't caused directly by COVID-19, but by government officials' precautionary measures. Attorney Michael Menapace of Wiggin and Dana in Hartford, who also teaches at the Quinnipiac University School of Law, represented AmGUARD in the Lenny & Joe's litigation. While Menapace declined to comment specifically on the case, he said, "e over- whelming majority of courts have dismissed these claims because businesses have not Attorney Ann Rubin of the law firm Carmody Torrance Sandak & Hennessey in Waterbury. Lenny & Joe's Fish Tale restaurant on Long Wharf Drive in New Haven closed in October, citing an expiring lease and the impact of COVID-19. Amphenol Corp.'s global headquarters in Wallingford. PHOTO | CONTRIBUTED PHOTO | MICHELLE TUCCITTO SULLO PHOTO | MICHELLE TUCCITTO SULLO

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