Indiana Restaurants ‘Categorically’ Denied Coverage Amid Pandemic by Society Insurance, Class Action Claims

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A family-owned Indianapolis Italian restaurant alleges Society Insurance has categorically denied Indiana eateries’ claims stemming from the coronavirus outbreak and/or the state’s mandatory shut down of dine-in services amid the pandemic. 

Though the plaintiff and other Indiana restaurants reasonably believed they had comprehensive coverage that would apply to business interruptions like those persisting during the COVID-19 crisis, Society Insurance has continued to accept policyholders’ premiums while issuing blanket denials “often with little or no investigation” and without regard for the interests of insureds, the lawsuit claims. 

According to the case, the plaintiff and many other Indiana restaurants, facing slim profit margins and dwindling reserve funds, have received form letters from Society Insurance in which the company has denied coverage based on what the suit says are “crabbed readings” of policy language. Society Insurance “swiftly” denied the plaintiff’s claim based in part on an unreasonable reading of the restaurant’s policy, which mirrors others issued throughout the state on a take-it-or-leave-it basis, the suit says.

“That gets insurance law exactly backwards—and raises the specter of bad-faith denials,” the complaint alleges, stressing the plaintiff has found itself during the pandemic in “precisely the situation it sought to avoid” when obtaining full-spectrum, comprehensive business interruption coverage.

The plaintiff’s Society Insurance policy, effective January 24, 2020 to January 24, 2021, includes business income, extra expense and civil authority coverages, the case explains. After the plaintiff reported to the defendant a loss of business income around March 20, the company denied the restaurant’s claim the following day on the position that “a slowdown in business due to the public’s fear of the coronavirus or a suspension of business because of a governmental authority … has ordered or recommended all or certain types of businesses to close is not a direct physical loss.”

“Society offered no written explanation of the factual or legal basis for these conclusions,” the complaint says, noting that only 24 hours passed between the submission of the plaintiff’s claim and the defendant’s denial. Upon information and belief, the suit continues, the letter sent by Society Insurance is a form document sent in response to any restaurant with comprehensive coverage that has filed a claim arising from Indiana’s business closure orders. 

Although Indiana has begun to relax its pandemic-related restrictions, the plaintiff will continue to lose out on business income given densely occupied public spaces such as restaurants are considered particularly unsafe, the lawsuit says.  

As the pandemic rolls on, the insurance industry has come under fire over what many plaintiffs argue are improper blanket denials of coverage for businesses ordered to shut down or operate at a reduced capacity. 

ClassAction.org’s coverage of COVID-19 litigation can be found here and over on our Newswire.

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