Does Business Insurance Cover Interruptions Caused by COVID-19? SJC May Decide.
Verveine Corporation operate three restaurants, The Coppa, Toro, and Little Donkey, located in Boston and Cambridge and share common owners. For many years these businesses were covered by insurance. Like many restaurants, the plaintiff’s businesses were successful until March of 2020 when they suffered losses as a result of the pandemic and government shutdown that rendered their insured properties unusable and inaccessible. Faced with this issue, the plaintiffs submitted insurance claims for loss of business income. However, their request was quickly rejected by a form letter. In June of 2020, the plaintiffs filed suit against Strathmore, alleging breach of contract for its denial of coverage and seeking declaratory judgment for enforcement of the insurance policies in the case of Verveine Corp. v. Strathmore.
The policy provided Business Income and Extra Expense Coverage, which covered, loss of business income due to necessary suspension of business operations during the period of restoration. The suspension must be caused by direct physical loss of or damage to property. One of the restaurants, the Little Donkey, even contained an “Exclusion of Loss Due to Virus or Bacteria” which states that the policy will not cover “loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease.”