He's one of hundreds of independent restaurant owners who have failed to recover any insurance compensation.

By Gowri Chandra
July 30, 2020
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Not one to shy away from the pursuit of justice, José Andrés is suing his restaurants’ insurance company, alleging they've refused to pay out any COVID-19 insurance claims. On Wednesday, July 29, the celebrity chef and humanitarian filed a lawsuit on behalf of 16 of his restaurants against Travelers Insurance Company for losses suffered from the pandemic. His lawyers tell Food & Wine that the company has not paid “one cent” to Andrés’s ThinkFoodGroup, despite collecting $456,155 in insurance premiums so far this year.

“For over 22 years, our company has consistently paid considerable annual premiums for business interruption insurance from Travelers and now is the time for them to fulfill their obligation,” said Andrés in a statement. He is joined by Washington D.C.-based restaurant Central Michel Richard, as well as Dallas-based restaurant Salum, which have both filed lawsuits against Travelers Insurance Company.

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And they’re not alone. “Hundreds of similar lawsuits have been filed throughout the country by restaurants large and small whose insurers will not pay losses under business interruption policies,” attorney Geoffrey Graber tells Food & Wine. He’s a partner at Cohen Milstein Sellers & Toll, which is representing both ThinkFoodGroup and Central Michel Richard. Notable other restaurants include Chez Panisse, The French Laundry, Musso and Frank, and Legal Seafoods, which have all taken their insurers to court to try to recover a fraction of the industry’s estimated $145 billion dollar loss.

Meanwhile, the insurance companies themselves are taking their case to Congress, effectively arguing that they can’t afford to pay restaurants. Furthermore, they’re stating that their policies were never meant to cover something as ubiquitous as COVID-19—despite, in some cases, language to the contrary.

In a statement to Food & Wine, a Travelers spokesperson wrote, "This is an enormously difficult situation for individuals and businesses, and we are committed to paying covered claims, but we simply cannot pay for losses that a policy expressly excludes. In our standard commercial property policies that include business interruption coverage, we have very specific exclusions stating that losses resulting from a virus or bacteria are not covered. If we are going to honor our promises to policyholders for the risks they have paid premiums for and insured against, then we have to protect the integrity of our contracts."

Some companies, like In-N-Out, have an “all-risk” policy with its insurance company that promises to cover “entirely unknown and novel risks that may arise which were not previously considered by the company,” Nation’s Restaurant News reports. Nonetheless, Zurich American Insurance Company has refused to pay the burger chain for business interruption losses.

This type of denial of claim is a clear breach of contract, lawyers allege. All-risk policies are “supposed to cover every single risk,” attorney Michael C. Davis told The Washington Post. “It doesn’t matter if it’s a risk no one ever heard of. It doesn’t matter if it’s Martians coming down from Mars. Unless it’s specifically excluded, you’ve got to cover it.”

Some policies, however, do contain specific exceptions for viruses or infectious disease. This started being widely worked into contracts after the 2002 SARS epidemic, as reported by The Washington Post. Even in these cases, however, some lawyers argue the language is unclear or misleading.

In Andrés’s case, his policies include all-risk coverage. However, the insurance company is requiring “visible physical damage” in order to make a payout, Graber explains, though the “policies certainly do not say this.” He adds that insurance companies use this same argument with other situations in which physical damage is hard to prove, like forced evacuations.

Graber states that no insurance companies thus far have stepped up to make a pandemic-related payout, effectively presenting a united front. Still, he’s pretty confident in the chance of success. “It is hard to imagine that after reviewing the policy language and comparing the equities, courts across the country will allow insurance carriers to sit on hundreds of billions of dollars held in reserve for just such a situation,” he says.

He estimates Andrés’s losses are “in the millions, and continue to climb.”