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Legal Sea Foods Is Suing Its Insurer for Denying Its Coronavirus Claim

The Boston seafood giant believes losses should be covered by business interruption insurance

A brick and stone patio in front of a Legal Sea Foods outpost in Chestnut Hill
Legal Sea Foods at Chestnut Hill
Jackie Cain/Eater Boston

Boston-based seafood restaurant chain Legal Sea Foods is suing its insurer, Strathmore Insurance Co., for rejecting a claim it filed for damages resulting from the COVID-19 pandemic. The seafood chain claims that its “all risks” policy should cover losses incurred by dine-in shutdowns in Massachusetts and the other states in which it operates. The lawsuit was filed in federal court in Boston on May 4.

According to reporting from The Boston Globe, the lawsuit states that Legal Sea Foods’ insurance policy doesn’t contain a pandemic exclusion. Pandemic exclusions became de rigueur for most major insurance companies in the wake of the SARS epidemic of 2003. From Eater Boston’s earlier reporting on business interruption insurance claims:

In 2006, the Insurance Services Office (ISO) — an advisory organization that helps insurance companies assess risk and meet state regulatory requirements — submitted Form CP 01 40 07 06 to state regulators. The form is titled “Exclusion for Loss Due to Virus or Bacteria,” and it disallows commercial property insurance policy holders (which is the kind of insurance policy a restaurant owner would purchase) from filing business interruption claims based on losses or damage caused by a viral or bacterial outbreak.

Legal Sea Foods signed its most recent insurance policy on March 1, 2020, a week and a half before the World Health Organization officially declared the coronavirus a pandemic. “They certainly would have known about it,” said Legal Sea Foods CEO Roger Berkowitz to the Globe, referring to Strathmore Insurance Co.

Berkowitz is the latest in an increasingly long line of Massachusetts restaurant operators fighting for insurance companies to cover losses due to the COVID-19 pandemic. Michael Scelfo, who owns a trio of restaurants in Cambridge, and Andy Husbands, who owns the Smoke Shop BBQ restaurants in Boston, Cambridge, and Somerville, have been vocal in their support of legislation filed with the Massachusetts legislature.

Bill S.2655, which was filed by Massachusetts state senator Jamie Eldridge in March, would require insurance companies operating in Massachusetts to pay out business interruption claims to policy holders whose businesses have been negatively impacted by COVID-19. As it stands, the bill has been referred to the Joint Committee on Financial Services. To date, it has the support of more than 40 Massachusetts legislators.

But until the state acts on the legislation, restaurant operators like Berkowitz will be forced to fight it out in the courts.

Legal Sea Foods Sues Insurer for Coronavirus Coverage [BG]
Massachusetts Could Require Insurance Companies to Cover Business Losses Caused by COVID-19 [EBOS]