Safety Insurance Company No Payout for Covid-19 Business Losses Class Action

Should insurance companies pay for business losses caused by closures to prevent the spread of Covid-19? The complaint for this class action alleges that Safety Insurance Company and Safety Indemnity Insurance Company should provide payouts under policies that provide business interruption coverage, extra expense coverage, and civil authority coverage.

The plaintiff in this case, Paul Marshall, II, DMD, has a cosmetic dentistry business in Hyannis, Massachusetts. The business was forced to suspend operations in March 2020 due to the Covid-19 pandemic and what the complaint calls “related actions of civil authorities prohibiting access to and occupancy of the business.”

The business’s policy with Safety is an all-risk policy, which means, the complaint says, that “all risks of loss are covered unless they are specifically excluded.” It offers three kinds of loss coverage that the complaint alleges are relevant here:

The Business Interruption Coverage protects against “as loss of business income due to a ‘suspension’ of the business’s ‘operations’ due to direct physical loss of or damage to property at the premises of the business.

The Extra Expense Coverage promises to pay “expenses incurred that would not have been incurred absent the physical loss of or physical damage to the property at the premises of the business.”

The Civil Authority Coverage is supposed to pay “for loss of business income sustained when the action of a civil authority prohibits access to the business premises.” According to the complaint, the “Civil Authority provision is an independent basis for business interruption coverage. That is, it can be triggered even when the standard business interruption coverage is not.”

According to the complaint, all three of these coverages apply. However, the complaint alleges, Safety has refused to pay for these losses and expenses.” The complaint suggests that “Safety has failed to pay for similar losses and expenses of other insureds holding policies that are, in all material respects, identical.”

The complaint defines three classes for this action.

The Business Income Coverage Class is all persons and entities with Business Income Coverage and/or Extended Business Income Coverage under a property insurance policy issued by Safety, where the business suffered a suspension of operations, and for which Safety has either denied or stated that it will deny a claim for losses, or which it has failed to acknowledge or accept as a covered loss or pay for the covered loss.

There are two other, similar classes, an Extra Expense Coverage Class and a Civil Authority Coverage Class. For further details on these classes, see page 10 of the complaint linked below.

Article Type: Lawsuit
Topic: Insurance

Most Recent Case Event

Safety Insurance Company No Payout for Covid-19 Business Losses Complaint

August 17, 2020

Should insurance companies pay for business losses caused by closures to prevent the spread of Covid-19? The complaint for this class action alleges that Safety Insurance Company and Safety Indemnity Insurance Company should provide payouts under policies that provide business interruption coverage, extra expense coverage, and civil authority coverage.

Safety Insurance Company No Payout for Covid-19 Business Losses Complaint

Case Event History

Safety Insurance Company No Payout for Covid-19 Business Losses Complaint

August 17, 2020

Should insurance companies pay for business losses caused by closures to prevent the spread of Covid-19? The complaint for this class action alleges that Safety Insurance Company and Safety Indemnity Insurance Company should provide payouts under policies that provide business interruption coverage, extra expense coverage, and civil authority coverage.

Safety Insurance Company No Payout for Covid-19 Business Losses Complaint
Tags: Business Insurance, Covid-19 Related, Denial of Benefits, Insurance