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In-N-Out sues its business interruption insurance provider

The burger chain has sued Zurich American Insurance Company for breach of contract in denying its claim.
Photograph: Shutterstock

In-N-Out Burger added its substantial voice to the chorus of restaurant owners who say insurance companies are improperly denying their business interruption insurance claims.

The Irvine, Calif.-based burger chain last week sued its insurance company, Zurich American Insurance Co., for breach of contract after the insurer officially denied its business interruption insurance claim.

In its complaint, filed in a federal court in California, In-N-Out says it has an “all-risk” coverage plan with Zurich that covers common risks such as fire but also “novel risks that may arise which were not previously considered by the company, Zurich or by the public-at-large.”

The complaint says the policy “contains no exclusion for viruses or infectious diseases.”

As a result of the pandemic and shutdowns of dining rooms in most states, In-N-Out argued that it suffered “significant losses.”

“As a result of the COVID-19 pandemic, the property damage caused by the novel coronavirus, and in compliance with government guidance and orders, In-N-Out was forced to close all of its restaurant dining rooms,” the complaint says. “Based on the phased reopening being permitted by numerous government agencies, it appears highly likely that the reopening of dining rooms will be allowed only in a phased approach that may vary by specific location.”

The company says it “has suffered and continues to suffer significant losses from the closures of its dining rooms.”

In-N-Out has a policy with Zurich with a $250 million limit, and in its complaint says that it notified Zurich of its coronavirus loss in April. The burger chain said the insurer’s investigation was “limited to a short email containing a handful of questions regarding COVID-19 diagnoses and the amount of loss.”

Within a week, a senior Zurich employee told In-N-Out that he believed the insurer would not cover the loss, according to the complaint, which also quotes Zurich CFO George Quinn noting in May that 99% of its plans do not cover virus outbreaks.

Zurich officially denied its claim on Friday. In-N-Out filed its lawsuit that same day.

Representatives from Zurich did not respond to a request for comment Tuesday.

Business interruption insurance has become a major point of contention as the coronavirus led to industrywide closures and service reductions. High-profile restaurateurs such as Thomas Keller have sued over service denials. The seafood chain Legal Sea Foods has also sued over its policy.

Restaurant groups have pushed for assistance, and state legislatures have introduced their own bills to extend coverage to COVID-19.

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