Legal Sea Foods sues after coronavirus insurance claim denied twice

Restaurant chain signed 'all-risk' policy on March 1 as COVID-19 threat loomed

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Legal Sea Foods is suing its insurance company for denying its coronavirus-related claims even though the restaurant chain took precautions to ensure it had the necessary coverage as the threat of the pandemic grew.

Legal Sea Foods President and CEO Roger Berkowitz told FOX Business on Wednesday the company was under an all-risk policy with Strathmore Insurance Co., which was signed on March 1 as concerns surrounding the virus loomed. The chain is now suing Strathmore after its loss claims were rejected twice.

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“We’ve been in the restaurant business a long time and we, over the years, we understand all the risks that happen in the course of doing business. So, that’s why we put out an all-risk policy and we signed an all-risk policy,” Berkowitz told "Mornings with Maria." “There was no exclusion in the policy for COVID-19 or the pandemic, so we felt we were pretty well-covered on it.”

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Legal signed the policy on March 1, when COVID-19 cases were already being reported in China, Europe and parts of the west coast of the U.S., Berkowitz said.

“We submitted the claim and it was immediately rejected,” he said, explaining how the company then enlisted the advice of attorneys and insurance experts. “They said, ‘You know, we’ve seen hundreds of policies. Very few have the exclusion and all risk.’… We submitted it again, it got kicked back without any investigation. So we assume that’s the default position and we’re going after it.”

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A spokesperson for Strathmore could not immediately be reached for comment.

Legal opened its first restaurants in the late 1960s and has grown to operate more than 30 locations along the East Coast.

The restaurant chain filed its first insurance claim with the company on March 23 and it was rejected three days later, explaining in its response: “This does not constitute physical loss of or damage to either covered property at the described premises or damage to any property in the surrounding area which would limit access to the insured location(s)," according to a Boston Globe report on the suit.

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Legal has furloughed more than 3,000 employees, according to the report, and opted not to continue processing takeout orders to prevent staff from potentially contracting the virus.

Berkowitz had intended to use the insurance money to pay vendors and employees, he told the Globe.

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Meanwhile, Legal is preparing its plans to reopen some restaurants as states begin to loosen COVID-19 restrictions.

In addition to certain health and safety expectations, such as that occupancy will be down and social distancing guidelines will need to be followed, Berkowitz said the company is working to obtain new equipment to further ensure any viruses present in their restaurants are eliminated before reopening.

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“One of the things we’re looking into, frankly, is a fogging mechanism to fog every restaurant before it opens to make sure that all the viruses that could potentially be there are eliminated,” he said. “We’re trying to procure them as we speak.”