Friday, March 29, AD 2024 6:26am

Insurance Companies Suddenly Have Skin in the Game

This is significant:

An Ohio federal judge ruled Tuesday that Zurich American Insurance Co. must cover losses suffered by more than a dozen steak and seafood restaurants due to COVID-19 shutdown orders, finding that the eateries’ policy can reasonably be interpreted to cover the loss of use of property.

U.S. District Judge Dan Aaron Polster found that Zurich had breached its obligation to provide lost business income coverage to Henderson Road Restaurant System and a slew of related companies that operate 16 restaurants in Ohio, Michigan, Florida, Indiana and Pennsylvania, including 13 locations of the Hyde Park Prime Steakhouse chain.

The insurance company argued that tangible structural damage to the restaurants was necessary to satisfy the policy’s threshold requirement that business income losses be tied to “direct physical loss of or damage to” property. According to Zurich, this prerequisite clearly was not met here because the eateries specifically stated in court filings that their properties did not sustain any structural damage — from the novel coronavirus or otherwise.

But Judge Polster rebuffed Zurich’s assertions, instead agreeing with the restaurants that the business income provision can also reasonably be read to extend coverage in instances where the policyholder merely loses its ability to use its insured properties for their intended purpose. He said that, under that interpretation, the eateries have shown they suffered a covered loss of use because the various state and local pandemic closure orders temporarily prohibited them from offering in-person dining, which is the cornerstone of their business model.

“Plaintiffs argue that they lost their real property when the state governments ordered that the properties could no longer be used for their intended purposes — as dine-in restaurants,” Judge Polster wrote. “The policy’s language is susceptible to this interpretation.”

 

 

 

 

Go here to read the rest. Go here to read the decsion.  Lockdowns were all fun and games as long as it was only small businesses and small people being crushed.  Now huge insurance companies may be on the hook.  Lots of these cases are making their way through the courts.  Look for the insurance companies to begin putting pressure on governments to open up.

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Michael Dowd
Michael Dowd
Thursday, January 28, AD 2021 3:21am

Also, banks, investment REITs, bonds, etc are on the hook as business that can’t operate because of the lock down can’t pay their rent or mortgages. This would also include the millions of individuals who lost their jobs and can no longer service their debt. The Federal Reverse will no doubt keep the the free money coming. But at some point our entire system is going to collapse.

DJH
DJH
Thursday, January 28, AD 2021 1:56pm

I understand that Gretchen here in MIchigan is closely tied to Blue Cross Blue Shield. Wonder if there is some sort of lawsuit in the works that is having her scared. I hear she has been a bit nicer as of late.
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The previous governor, Synder has been brought up on charges over the crisis regarding Flint’s water. There has been whispers that the same laws could be used against Gretchn and her friends.

c matt
c matt
Thursday, January 28, AD 2021 3:53pm

no worries, they will get bailed out like the mortgage banks. only difference being the ins companies will actually have to pay out, unlike the banks that foreclosed, got the properties, and THEN got their worthless mortgages paid by the government. guess the banskters have better lobbyists.

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