Hard-hit restaurants press business-interruption claims even on policies that excluded pandemics.
For example, Wolfgang Puck does not have a pandemic policy. It expects Congress to take care of it.
The Wall Street Journal reports Restaurants vs. Insurers Shapes Up as Main Event In D.C. Lobbying Fight
Restaurants and their allies are lobbying President Trump and Congress to press insurance companies to cover “business interruption” claims stemming from the coronavirus, even where restaurants have policies that exclude losses from pandemics.
While insurers do offer coverage, those policies are significantly more expensive than standard business-interruption policies, and few restaurants carry them, industry representatives said. But restaurants and some U.S. lawmakers say the business-shutdown orders in states and cities should constitute business interruptions under their existing policies.
Insurers are pushing back hard with the help of some Republican senators and conservative groups, saying retroactive changes to coverage policies and threats of lawsuits from restaurants could undermine the nation’s insurance system.
“Big” Bedfellows
Cheatsheet reports Celebrity chef Wolfgang Puck has joined fellow renowned chefs Thomas Keller, Daniel Boulud, Jean-Georges Vongerichten, and Dominique Crenn to form BIG, (Business Interruption Group), a new national legal, political, and communications campaign launched in partnership with an industry-savvy insurance attorney.
The group has spoken by phone to President Trump for his assistance in communicating with insurance companies, who have, for the most part, denied restaurants assistance during the pandemic. Specifically, they are requesting the U.S. president to step in on their behalf. And it looks like Mr. Trump is sympathetic.
Puck said, “We were encouraged by our conversation with the president about the urgent need to help the restaurant industry. All of us paid business interruption insurance for years to protect the livelihood of our employees. If the restaurant industry collapses, it has a massive effect on the entire economy. . .”
Understanding the Legal Battle
- Those with no business interruption policy have no claim.
- Restaurants that do have business interruption policies ought to be covered unless the policy specifically excludes pandemics.
- Policies cannot be changed after the fact by Congress or anyone else, except by universal agreement of all of those who the policy covers.
The disagreement is whether the shutdown is pandemic-related or government-related.
Lobbyists have taken sides.
I believe this should be up to a court of law with the decision depending on specific policy language.
It should not be up to Congress to interpret law, nor to make businesses whole for those companies with inadequate insurance, nor insurance companies who go burnt by offering pandemic insurance.
Mish
“Charlie Bilello (@charliebilello)
While the vast majority of actual small businesses received nothing, some of the large public companies that received funds…
Potbelly: $10 million
Ruth’s Chris Steak House: $20 million
Fiesta Restaurant Group: $10 million
Shake Shack: $10 million
Quantum: $10 million”
Linked In: “Shake Shack is returning its PPP Loan. Here’s why.”
“Charlie Bilello (@charliebilello)
The SBA gave 1.66 million loans through the Paycheck Protection Program (PPP). There are 30.7 million small businesses in America according to the SBA. So 5.4% received funds before the program ran out of money last week. 94.6% received nothing.”
Help for small businesses is WAY under funded.
One of my own behavioral modifications after we get through this will be a rabid focus on only supporting local small business whenever possible.
Compassion is not the role of government. Restaurants need to open and invite their customers to be kind and pay for their food. I will be compassionate to those I choose. Today we think government has enough money to be compassionate. It doesn’t.
I think government’s bottom line is equity and fairness, and for political reasons — compassion. Business’ bottom line is .. the bottom line. The great depression showed expecting compassion from the public as a whole aint gonna happen. If it had, there would have been no FDR.
There were some people who were compassionate in the depression but not nearly enough of them. There are certain fundamental rights we all are promised as Americans, and laws favoring banks and corporate shareholders have eroded those rights to the point where we have millions of people without even a roof over their heads, or adequate health care, or decent diets, there is a mutually exclusive definition in our political system now as to what the founders meant when they called upon the new federal government to guarantee the the welfare of the people, the common good.
Part of the problem is that the nation that constitution was drafted for was a rural agrarian nation with few corporations or powerful dynastic 1% sucking all the capital out of the nation. But, the words of the constitution and it’s preamble do authorize government to determine what is in the national interest as it relates to viable societies and the public good, and to employ strategies to achieve that common welfare. And for the right wingers who THINK we can do what was done then and get adequate results they are dead wrong, that will destroy the nation. This is an urban nation of a third of a billion people which is on knife’s edge of stability and even survival. The things that promote the common good now are not the same as what George Washington faced.
The government’s bottom line is to benefit itself. Where is the Illinois government’s compassion for the tax payers it is drowning to pay for its largess to it’s employees? People are leaving the state because they can’t afford the government any more.
I fail to see the equity and fairness of legislators and public servants, who are supposed to be serving the people, enriching themselves at the expense of the people they claim to be serving.
SMALL (Stupidly Missing Any Legal Liability) may win out over BIG.
“It should not be up to Congress to interpret law, nor to make businesses whole for those companies with inadequate insurance, nor insurance companies who go burnt by offering pandemic insurance.”
But then what is the locus standii of law in a lawless land, where money can be conjured by one entity out of thin air, distributed by another entity as it sees fit and okayed by representatives operating on the basis of you scratch my back and I will scratch yours. Law is for the washed out, who cannot lobby.
I would like to see a legal challenge to the feds completely disregarding the laws that govern their charter. They are using Enron type of accounting tricks to pull this off. Even more so when they start to outright buy junk bonds, not just fallen angels and when they start to buy stocks. There needs to be a legal challenge mounted and resolved by the courts.
Hi Mish,
The Property Insurance Policy could include First Party Business Interruption. Other extensions may include Extra Expense, Contingent Business Interruption and…Civil Authority trigger, the latter coming into play for a government shutdown of the area or at least ingress / egress limitations. The actual exposure “thing” doesn’t necessarily need to be present on their premises to trigger coverage.
The business and / or the landlord-building owner may also have same for loss of rents.
Contingent business interruption can come into play for supply-chain issues.
All parties if enlightened by their insurance broker may have purchased an environmental insurance policy in addition to their property and casualty policies. Typically the biological-related coverage is for mold/fungi, however some policy forms include affirmative coverage for bacteria (legionella) and virus. Similar to the property policy, the environmental policy can have the business interruption coverage with all of the extensions listed above. The rationale that mold, bacteria and virus finds their way onto an environmental (pollution) policy is via “contaminant”.
Nursing homes / assisted living / senior living are notorious for mold claims usually due to cheap construction and / or poor maintenance. They also have legionella claims sometimes resulting in bodily injury / death claims. Norovirus are also too common. As we know, the residents are already immuno-compromised on the way in, making them more susceptible to these illnesses.
Hotels have mold claims, usually the cheap hotels, but an upscale hotel in Chicago had a legionella death claim a few years ago.
All environmental insurance policy forms are proprietary / unique in terms and are typically negotiated on a case-by-case basis with the insurer. Property and General Liability policies are more standard, but again policies differ by insurer / insured. All policies have an Other Insurance condition, where it states if more than one policy may apply, this policy is primary, excess or primary-sharing.
If Congress gets involved it will be worse for all parties; I don’t see where they have the authority. Insurance is issued on either an admitted (more regulated by state) or non-admitted for non-standard lines (insurer usually has freedom of form and rate), as in the case of most environmental policies. Policies usually have a Choice of Law, Forum, Venue condition and most insurers like New York State for that. I suppose the restaurants want their fill at the government bailout trough, too.
If claim is rightfully denied by insurer, insured can always sue their broker on the errors and omissions policy if they f-ed up. Many of the medium or even lower scale chain / fast food restaurants have decent insurance coverage, so perhaps Wolfgang and / or his broker are idiots or cheap skates when it comes to evaluating risks and exposures and considering coverage and possible enhancements. There are businesses out there who have all of the coverage I described above for a nuclear, biological, chemical and radiological (NBCR) terrorist incident, so it can be had, just need to pay $$$$ depending on your exposure, which mostly has to do with your location(s).
Wow – Thanks
What a wealth of information
I sinsurance your business?
Hi Dodge please shoot me an email.
Thanks
I wouldn’t think most business interruption insurance policies would cover this, but I’m sure it depends on the exact wording of the policy. That’s why the guys that craft the specific words make the big bucks.
Make America Gluttons Again Act.
Americans are now required to go to restaurants for breakfast, lunch and dinner.
Yet another stimulus bill gettin ready to drop,trillions more goin to banks and wall street and politicians off shore bank accounts…..MAGA bitches lol!
O/T (sorta). ‘light crude’ is under $16 as I write this.
Oil under $12 this morning
….Canada had actually TO PAY, at one point today, to get rid of its black gold !
Why doesn’t the FED just buy all restaurants?
This is just more of the big financial mess the world is in.
Cascading defaults, bankruptcies, permanent closures. Just let them all go and the courts will settle it all out over the next 10 years.
Maybe will see some sort of ‘Resolution Trust Corporation’ like we did during the S&L crisis, except it won’t be just for financial institutions.
Do Covid-19 death rates by age suggest a path to staying open in a second wave? The gist of the document related to the title starts on page 19 link to docs.google.com
“Do Covid-19 death rates by age suggest a path to staying open in a second wave?”
Or a path to forcibly quarantine 67-year-olds like myself.
Kudos to the writers. The paper advocates exactly the kind of balanced, rational response that will not be acceptable to a population paralyzed by fear.
Balanced like ignoring everything about the disease except death, things like permanent damage to organs, permanent damages to cognition, loss of limbs from clotting, etc? There are people of all ages ending up with lifelong disability due to the disease, but that gets lost in fixation over death rates. Furthermore death rates even among people in their 40’s and 50’s are not reassuring.
Individual state governors should be held financially accountable. The business shutdown was a state decision. Let the chips fall where they may.
partly…
Let the courts sort it out, it’s not a job for the Federal government or the US taxpayer. Restaurants are not a vital industry that requires a taxpayer bailout.
I still have 1/2 of all restaurant gift cards issued over the last 5 years in the state of Michigan (we have 9 kids). I can’t be held responsible in any way shape or form for their dilemma in the last month. Probably 1/2 of them will never reopen, but maybe I’ll pick a most inopportune time to cash them in.
Don’t know how much your gift cards cost but I renewed my YMCA membership for $240 on March 3.
Actually, we started spring cleaning and we found 1,200 bucks worth, and thats not even where we keep that kind of stuff. There’s got to be 4K worth… those are the big corporate restaurants like Ruth Chris Steakhouse, Olive Garden, ect… We don’t go to those places, our kids do though.
Wow!
Nothing like going into a failing restaurant, assured of ingredient quality and staff focused on things like attentive service and green meat…
9 KIDS ?? …and you seem to be proud of it … What would the world be like if everyone had 9 kids ? Well, even more of a mess, that s for sure !