Restaurants, Businesses Fighting Back Against COVID-19 Business Interruption Insurance Denials

Businesses across a range of sectors are fighting back against unscrupulous insurance companies, charging that insurers are operating in bad faith by rejecting claims for damages caused by the COVID-19 pandemic and shelter-in-place orders that have shut down their businesses

Most recently in Texas, the Fears Nachawati Law Firm has filed lawsuits on behalf of Dallas-based Salum restaurant and Houston-based Frosch International Travel after Travelers Indemnity Company rejected their damages and business-interruption claims without investigating.

“This is the definition of bad faith,” said Fears Nachawati trial lawyer Matthew McCarley. “Insurance companies like Travelers have systematically taken advantage of loyal policy holders, promising coverage but backing out when businesses need them the most.”

According to the Salum lawsuit, Travelers wrongly stated that language in the restaurant’s policy specifically excludes losses caused by “bacteria and viruses.” However, Salum’s “Deluxe Coverage” policy contains no such language. Travelers also claims that the restaurant has not suffered because restaurants are allowed to sell food to-go, even though it has never offered takeout service.

Across the country, businesses affected by the pandemic are finding that business interruption claims are systematically being denied as the insurance industry’s powerful lobby pressures lawmakers to change the rules after the fact and exempt the industry from pandemic-related liability.

The lawsuits ask the court to issue declaratory judgments that Travelers must honor the policies and cover the damages claims. They also seek damages for breach of contract, violation of the Texas Insurance Code, and breach of Travelers’ duty of good faith and fair dealing. Insurance statutes provide for up to triple the amount of punitive awards for insurance companies found to have operated in bad faith.

For more information contact Robert Tharp at or 800-559-4534

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