Travelers Insurance Hit With Wave of Lawsuits Over Coronavirus Coverage

Empty Los Angeles - closed restaurant - corona virus pandemic - Getty - H 2020
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Mark Geragos and his law firm — along with multiple clients — are suing Travelers Insurance for initially denying coverage of their pandemic-related claims. 

The firm says that while it's technically an essential business and not subject to a mandated shutdown, access to its downtown L.A. office has been "greatly limited" and the company has "been forced to deal with a substantial loss in business traffic and client/law-related business activities."

Meanwhile, Geragos is suing in his capacity as a landlord of a Glendale property and argues access to his property and both businesses that use it has been prohibited and he has "been forced to deal with unpaid rent and other related issues stemming from its tenants’ cessation of use with respect to the Insured Premises."

Each of the complaints contains similar arguments as to why Travelers is liable for coverage.

"Plaintiff faithfully paid policy premiums to Travelers, specifically to provide additional coverages for 'Business Income and Extra Expense Coverage' in the event of business closures by order of Civil Authority," states one complaint filed by attorneys from Geragos & Geragos and Dhillon Law Group. "Under the Policy, insurance is extended to apply to the actual loss of business income sustained and the actual, necessary and reasonable extra expenses incurred when access to the scheduled premises is specifically prohibited by order of Civil Authority as the direct result of a covered cause of loss to property in the immediate area of Plaintiff’s scheduled premises. This additional coverage is identified as coverage under 'Civil Authority' as part of the Policy’s 'Property Optional Coverages' section."

The complaints argue this coverage was triggered when L.A. Mayor Eric Garcetti (who also is named as a defendant) ordered all non-essential businesses to close and limited dining establishments to takeout and delivery orders only, and it was further exacerbated by Gov. Gavin Newsom's statewide "Stay-at-Home Order." 

"You pay insurance for decades for precisely the unthinkable, and when it happens these insurance companies do the unconscionable," Geragos tells THR. Meanwhile, his colleague Ben Meiselas on Twitter said these complaints are "the first of what will likely be millions of lawsuits for small businesses against large insurance companies for failing to provide promised coverage."

The businesses — which so far also include 10e restaurant; a cafe and deli in Montrose; and a building in La Canada Flintridge, which holds a printing business and beauty services company — all say they specifically pay for coverage in such circumstances. 

Each of the complaints ask the court for a declaration that Garcetti's order constitutes a prohibition of access to its insured premises; that said prohibition fits the definition under its policy; that the order triggers coverage because the policy doesn't exclude a viral pandemic and extends coverage to include physical loss and damage, including by virus; and that the policy provides coverage for any current and future civil authority closures of restaurants in California due to physical loss or damage from the novel coronavirus and provides business income coverage.

Travelers Insurance has not yet responded to a request for comment, but its website has a section dedicated to its coronavirus efforts that includes a pledged $5 million contribution for relief efforts.