Several midwest companies have filed a class action lawsuit against Society Insurance, protesting the company’s refusal to cover COVID-19 business losses.

The COVID-19 closures class action lawsuit was filed by Madison Sourdough and a Twin Cities group of taverns known collectively as Willy McCoys.

The plaintiffs explain that despite providing consistent services for their communities, they were forced to close to help prevent the spread of the coronavirus.

As this took a toll on their businesses, they say that they turned to their insurer, Society Insurance, and filed claims for their losses. However, these business interruption claims were denied, and wrongly so, say the businesses.

The businesses note that they purchased insurance plans with Society Insurance specifically to protect their businesses from events outside of their control. The insurance policies allegedly included special property coverage and business income coverage.

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According to the Midwest businesses closures class action lawsuit, the insurer’s special property coverage insures against business losses caused by the “action of a civil authority that prohibits access to the insured premises.” 

Additionally, the plan reportedly includes “contamination” coverage, paying for actual business income and losses caused by contamination in a number of forms.

The businesses stress that the plan’s contamination coverage does include an instance in which a “public health or other governmental authority…prohibits access to the described premises and adverse ‘publicity’ resulting from the discovery or suspicion of ‘contamination.’”

McCoys and Rising Dough state that the COVID-19 business closures fall under both of these categories, as authorities in their states mandated the closures of bars and restaurants, which affected both of these businesses. Allegedly, both businesses were forced to close.

Madison Sourdough operates a mill, café, a patisserie, and a bakery known as Rising Dough, and they sell bread to numerous other establishments in their area.

According to McCoys and Rising Dough, they had to close their businesses to comply with closure orders in both Wisconsin and Minnesota that limited travel, closed nonessential businesses, shuttered restaurants for on-site consumptions, and prohibited gathering in large groups to slow the spread of the virus.

They note that where other insurers do include exceptions to certain types of loss, including contamination, this plan does not.

Nonetheless, Society Insurance has allegedly refused to compensate policyholders for COVID-19 losses and closures. 

McCoys and Rising Dough say their insurer has refused to pay insurance benefits due to them, not only under the Contamination provision of the plan, but the Business Income, Civil Authority, Extra Expense, and Sue and Labor coverages. 

This refusal to pay benefits for coronavirus losses is contrary to what the insurance industry views as real loss, say the businesses. They claim that since at least 2006, the insurance industry has recognized that the presence of viruses and disease can cause real physical damage to a property.

Allegedly, these viruses and diseases can compromise product, can require the businesses to decontaminate their space, replace property, and grapple with other losses.

The COVID-19 Midwest business losses class action lawsuit says that in refusing to pay for losses related to the pandemic, Society Insurance breached contract on multiple counts, per the terms of their own plan. 

McCoys and Madison Sourdough claim that they were injured by this breach of contract, because had they known that the insurer would not honor its contract and would not pay for pandemic losses, they would not have paid premiums and enrolled in an insurance plan, or would not have paid as much to do so.

Noting that many other businesses are being denied coverage by the same insurer, McCoys and Madison Sourdough are now seeking a declaratory judgement requiring the insurer to pay the benefits that they claim are due, not only to them, but to all other similarly affected businesses. 

The businesses are represented by Timothy W. Burns, Jeff J. Bowen, Jesse J. Bair, and Freya K. Bowen of Burns Bowen Blair LLP; Adam J. Levitt, Daniel J. Ferri, Mark Hamill, Mark A. DiCello, Kenneth P. Abbarno, and Mark Abramowitz of DiCello Levitt Gutzler LLC; Mark Lanier and Alex Brown of The Lanier Law Firm PC; Bryan L. Bleichner, Jeffrey D. Bores, Christopher P. Renz, and Gary K. Luloff of Chestnut Cambronne PA; and Douglas Daniels of Daniels & Tredennick.

The Rising Dough, McCoys COVID-19 Loss Insurance Coverage Denial Class Action Lawsuit is Rising Dough Inc., et al. v. Society Insurance, Case No. 2:20-cv-00623-WED, in the U.S. District Court for the Eastern District of Wisconsin.

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