Pennsylvania Restaurant Claims Erie Insurance Group Refused to Pay COVID-19 Property Damage Claim

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Erie Insurance Group has been named in a proposed class action that alleges the company has wrongfully denied a Pennsylvania restaurant’s COVID-19-related property damage claim.

In the wake of the COVID-19 pandemic, restaurants such as the plaintiff suffered significant business losses after they were forced to shut down in accordance with state and local government orders, the lawsuit says. Although the plaintiff’s losses should have been covered under its all-risk Erie property insurance policy, the defendant denied the restaurant’s claim via letter on March 25, 2020.

The plaintiff business says its insurance policy included coverage for income protection, business personal property, civil authority and extended business income. The policy also contained an exclusion for losses caused by or resulting from “any virus, bacterium, or other microorganism,” the lawsuit states. 

The plaintiff argues, however, that this exclusion does not apply to losses stemming from the restaurant’s closure as the business was forced to shut down due to executive orders issued by Pennsylvania Governor Tom Wolf in response to the COVID-19 pandemic. From the complaint:

Citing civil authority orders and statements made by President Trump insisting that insurers should be paying business interruption claims, the case argues that both state and local governments are aware “that COVID-19 causes damage to property.”

“This is particularly true for businesses such as Plaintiff’s, where customer or client interaction and personal contact results in a heightened risk of the property becoming contaminated,” the complaint states.

The lawsuit claims that Erie intends to similarly deny proposed class members’ claims based on the argument that their losses are not covered due to the virus exclusion. Moreover, the defendant will argue that insureds have not suffered “direct physical loss of or damage to the property,” the case says. 

“On information and belief,” the complaint reads, “Erie intends to deny coverage to all Class members that file a business interruption claim in these circumstances.”

The lawsuit, which echoes dozens of other cases filed against commercial property insurers over their alleged denial of COVID-19-related damage claims, looks to represent all restaurants that have suffered business interruption and lost income due to civil authority orders issued in response to the pandemic.

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

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