Burger and shake joint loses COVID-19 insurance case in federal court

Published 11:54 am Wednesday, November 11, 2020

A popular Mississippi restaurant may have lost business due to COVID-19, but those losses are not covered by its insurance policy, a federal court recently determined.

Ed’s Burger Joint, a Hattiesburg restaurant known for its over-the-top burgers and shakes, became the latest business to be denied COVID-19-related business interruption coverage by an insurer after the U.S. District Court in Hattiesburg ruled no physical damage resulted under the terms of its policy with Travelers Casualty Insurance Co. of America.

The results of the case were reported in an article published on BusinessInsurance.com. 

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Real Hospitality LLC, which operates Ed’s Burger Joint, filed a federal suit against Travelers after the insurance provider denied coverage for its COVID-19-related business interruption losses.

The insurance company contended that Real Hospitality had not demonstrated that the restaurant had incurred any property damage covered by the policy and that coverage was also excluded by the policy’s virus exclusion. The restaurant disagreed, saying that it had suffered losses after it couldn’t operate the business during the pandemic.

The court ruled in favor of Travelers.

“Reading the Policy as a whole, the Court finds that Plaintiff’s complaint fails to state a claim because it does not allege that any insured property was damaged, or that Plaintiff was permanently dispossessed of any insured property,” the court stated. “Consequently, Plaintiff’s contention that ‘loss of property’ reasonably includes loss of usability is not sustainable.”

The ruling also said that coverage would be precluded under the policy’s virus exemption even if the plaintiff had been able to show it suffered property loss or damage under the policy.