"Georgia Judge Serves Ruling for Restaurants Hoping Business Income Insurance Will Cover COVID-19 Losses"
In an article published by Modern Restaurant Management on Oct. 16, 2020, Christy Maple and Kristin Tucker discuss a recent case, Henry’s Louisiana Grill, Inc. v. Allied Insurance Co. of America, in which two Georgia eateries sued their insurer after it refused to reimburse them for business income the eateries lost when they closed their doors in response to the Georgia governor’s executive order declaring a state of emergency in response to COVID-19.
The eateries claimed their lost income should be covered under two common business insurance policy provisions — now routinely cited by insureds seeking coverage for COVID-related business losses — the Business Income provision and the Civil Authority provision.
“The Business Income provision provides the insurer will pay for business income losses sustained due to a necessary ‘suspension’ of operations, provided the ‘suspension’ is caused by ‘direct physical loss of or damage to’ the premises,” explain Maple and Tucker.
The Civil Authority provision provides the insurer will pay for business income losses sustained when property other than the insured’s is damaged by a “covered cause of loss”— defined as “direct physical loss” — and action by a “civil authority” prohibits access to the insured’s premises, provided certain conditions are met.
“Thus, to recover under either provision, there must be a ‘direct physical loss’ to property,” said Maple and Tucker. “In Henry’s Louisiana, the Georgia court found that the restaurants had failed to show the requisite damage to either the insureds’ premises or to property other than the insureds’ and dismissed their case, determining there was no coverage for the businesses’ COVID-19 losses.”
To read the full article, please click here.