In a new class action lawsuit, a Pennsylvania restaurant says Erie Insurance Group improperly denied claims for losses due to coronavirus restrictions.

Lead plaintiff La Campagna Ristorante alleges the insurance company failed to meet its obligations after it and many other businesses were closed by government orders shutting down all nonessential businesses.

The plaintiff claims it suffered significant business losses due to the COVID-19 closure that should have been covered by its policy with Erie Insurance under a business interruption claim.

However, the coronavirus class action lawsuit says the restaurant’s claim were denied under a so-called “Virus Exclusion” in the policy.

“Erie will assert its insurance policies do not provide coverage for business interruption closures for all similarly situated Class members because of the exclusion in its policies ‘by or resulting from any virus, bacterium, or other microorganism’ (the ‘Virus Exclusion’),” the complaint states. “Erie will also assert that there is no coverage under the policy’s Business Income, Extra Expense, Civil Authority, or any other applicable provisions because they each require direct physical loss of or damage to property, which Erie will claim does not exist here or, upon information and belief, for any similarly situated Class member.”

The Pennsylvania restaurant asserts that it obtained business interruption insurance through Erie in April 2019 and faithfully paid all premiums.

La Campagna says it obtained the coverage to ensure that the business would remain afloat during circumstances such as COVID-19, in which a pandemic led to required business closures.

Once Pennsylvania issued a state of emergency, La Campagna closed its doors, the complaint states. The plaintiff says it has not opened since and the closure has led to layoffs and economic hardship for its owners and employees.

The plaintiff also points out that it and other Pennsylvania restaurants are environments in which people are more susceptible to contracting and spreading COVID-19, so it is imperative that they remain closed with limited options for business, despite the business interruption losses they continue to experience.

“Plaintiff and Class members faithfully paid policy premiums to Defendant, specifically to provide, among other things, additional coverages in the event of business interruption or closures by order of Civil Authority and for business income loss for property loss or damage,” the coronavirus class action lawsuit alleges.

“The terms of the Policy explicitly provide the insured with insurance coverage for income protection, along with any necessary extra expenses incurred, when access to the Insured’s properties is specifically prohibited by Civil Authority Orders.”

The plaintiff contends that losses it and other businesses suffered due to coronavirus restrictions are covered under Erie Insurance’s policy. The complaint points to language in the policy covering certain losses from the “action of civil authority that prohibits access to the premises.”

“The Policy is an all-risk policy, insofar as it provides that covered causes of loss under the policy provides coverage for all covered losses, including but not limited to direct physical loss and/or direct physical damage, unless a loss is specifically excluded or limited in the Policy,” the coronavirus class action lawsuit argues. “The Policy also provides coverage for damages resulting from ‘interruption of business’ when there is property loss or damage.”

The Pennsylvania restaurant also contends the “Virus Exclusion” in the Erie insurance policy does not apply to its and other Class Members’ losses and cannot be used as a basis for denying its business interruption insurance claims.

“Defendant is wrong,” the complaint contends. “The COVID-19 pandemic has caused Plaintiff and the proposed Class property damage and physical loss. Moreover, the Civil Authority Orders have also caused Plaintiff and the proposed Class to suffer compensable property damage and business losses. Further, and as a result, the aforementioned exclusion does not apply to the COVID-19 pandemic.”

The Pennsylvania restaurant seeks to represent all restaurants who have suffered losses due to business interruption under coronavirus restrictions implemented under civil authority orders. In addition to damages, the class action lawsuit is asking for a court order declaring that those with business interruption insurance are entitled to coverage for their losses.

COVID-19 and resulting restrictions on schools, businesses and movement have resulted in myriad legal issues facing consumers. Learn more about them with Top Class Actions’ coronavirus legal guide.

Has your business been denied a business interruption insurance claim after a COVID-19 closure? Tell us what happened in the comment section below!

The lead plaintiff and proposed Class Members are represented by Richard M. Golomb and Kenneth J. Grunfeld of Golomb & Honk PC; Arnold Levin, Laurence Berman, Frederick Longer, Daniel Levin and Michael Weinkowitz of Levin Sedran & Berman LLP; and W. Daniel “Dee” Miles III, Rachel N. Boyd and Paul W. Evans of Beasley Allen Crow Methvin Portos & Miles PC.

The Pennsylvania Restaurant COVID-19 Insurance Claim Class Action Lawsuit is La Campagna Inc. v. Erie Insurance Group, Case No. 2:20-cv-02689, in the U.S. District Court for the Eastern District of Pennsylvania.

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