As pandemic hits restaurants hard, some chefs sue insurers over denied claims: "We need help"
A group of chefs who said they have paid millions in insurance premiums over the years are now organizing to lobby for their claims to be paid. They say their insurance companies have denied claims in the face of the coronavirus pandemic. Famed Chef Thomas Keller said his insurance company turned down his claim for the "Business Interruption Insurance" he opted for, even though the pandemic has forced the closure of his three restaurants.
"This is a time of crisis right now. And we need help," Keller said.
According to Investopedia, Business Interruption Insurance is coverage designed to replace business income lost in a disaster. Keller and a few others chefs are trying to pressure insurers to pay restaurant claims nationwide.
"Our revenue source was cut off immediately," Keller told CBS News' Anna Werner. "One day, you are doing business. You have revenue. And the next day, there is nothing."
Keller, who runs three restaurants in Yountville including the French Laundry, was forced to lay off nearly all 450 of the employees working at those restaurants.
Although he said he signed up for virus coverage and paid extra for it, Keller said his insurer Hartford was "still denying" his claim. Hartford declined to comment, but Keller's policy states the company will pay for "direct physical loss or direct physical damage" caused by "'fungus', wet rot, dry rot, bacteria and virus."
Jimi Grande, a representative from the National Association of Mutual Insurance Companies, said most insurance contracts do not cover viruses or pandemics.
"Business interruption never contemplated anything of the size and scope of a pandemic virus," he said, arguing that it was "fundamentally uninsurable."
Grande's group and others want the government to set up a recovery fund for businesses, backed by taxpayer dollars.
"They're the only people that have enough size and scale. We're talking about trillions of dollars," Grande said.
Keller's attorney John Houghtaling, dismissed insurance companies' approach as "the same game that they've always done."
Houghtaling, who represents the chefs' group, claimed that the companies were holding back monies they allegedly owe "for leverage in Washington, for people to scream and for the tax payers and the rest of them to bail them out."
"Now, that's not right," he said.
Chef Edouardo Jordan runs three restaurants in Seattle, and said his claims were also denied.
"That's not fair," Jordan said. "That is not what we pay our business insurance for each and every month."
The Seattle chef called on insurance companies to "step up" and "dig deeper" to hold up their end of the bargain.
"At the end of the day, those companies do not show up for us," San Francisco chef and restauranteur Dominique Crenn said. Crenn said the chefs' lawsuit was being fought for something deeper than just their collection of restaurants.
"It's for the community of small businesses all over America," she said.