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Advisen Front Page News - Monday, March 30, 2020

Chef sues over insurance coverage
Chef sues over insurance coverage
Publication Date 03/27/2020
Source: San Francisco Chronicle (CA)

Prominent chef Thomas Keller is suing his insurance company for losses caused by the shutdowns of his two Napa County restaurants, a case that could help determine the extent of insurance coverage for the commercial impact of the coronavirus.

Keller owns the French Laundry restaurant and the Bouchon Bistro, both in Yountville. He closed them after the county's health officer, Karen Relucio, told all residents on March 18 to remain at home except for essential services or activities, and directed nonessential businesses to halt operations. More than 300 employees were sent home without pay, he said.

In a suit filed Wednesday in Napa County Superior Court, Keller's lawyers said they expect Hartford Fire Insurance Co. to deny coverage. Its policy, issued in July, includes a typical "business interruption" provision covering losses caused when a business is closed by government orders because of a "loss of property."

The restaurants suffered such losses, the suit argued, because their "property," food and utensils, was exposed to potential "loss" from infection by the virus, which can cling to surfaces for days unless cleansed.

"We need insurance companies to do the right thing and save millions of jobs," Keller said in a statement released by his lawyers. He said restaurants are the nation's largest private employer, with 15.6 million workers.

Hartford declined to comment on the lawsuit. But Keller's lawyer, John Houghtaling, pointed to an article posted March 12 by an insurance company lawyer, Shannon O'Malley, that argued against coverage for restaurant closures.

"The virus may be cleaned without essentially altering the property," O'Malley wrote. While "creative policy-holders and their attorneys may try to link the virus and physical property damage," she said, "suspected contamination" is not enough for coverage - and, at most, insurers would have to cover only the cleanup costs.

"I represent restaurants across the country, and they're all being told the same thing," said Houghtaling, who filed a similar suit last week for a restaurant owner in New Orleans. "The insurance industry is denying the fact that the coronavirus poses a danger to property."

He said some insurance policies covering business interruptions explicitly exclude coverage for harm caused by viruses, but Keller paid a higher premium for a policy that has no such exclusion.

Keller, 64, has been named the nation's best chef by multiple organizations over the years, and the French Laundry, which he has owned since 1994, has won similar honors as one of the world's top 50 restaurants. His suit asks a judge to declare that his insurance policy covers his losses.

Bob Egelko is a San Francisco Chronicle staff writer. Email: Twitter: @BobEgelko

Berkshire Hathaway
St. John's University