April 18, 2021

Steak n Shake sues its insurance company

Photograph: Shutterstock Disputes between restaurants and insurance companies are far from over even 13 months…

Photograph: Shutterstock

Disputes between restaurants and insurance companies are far from over even 13 months into the pandemic.

The latest example comes from Steak n Shake, the Indianapolis-based burger chain that earlier sued its insurance company, Zurich North America, over its denial of coverage for losses related to the pandemic and its shutdown of dine-in service.

In its lawsuit, filed in a federal district court in Ohio, Steak n Shake says it has a policy with Zurich and that it had paid all the premiums.

According to the lawsuit, the policy will pay for the loss of earnings due to the suspension of business. The lawsuit says that suspension by a “civil or military authority that prohibits access to the location” is covered under the policy.

Steak n Shake argues that the suspension of dine-in service in numerous states last year would fall under the policy’s definition. The company said it submitted a claim last March but that it was denied the following May.

A spokeswoman for Zurich North America said the company doesn’t comment on litigation.

The lawsuit is only the latest in a number of battles between restaurants and restaurant chains and the insurers they paid to cover damages before the pandemic—In-N-Out, for instance, has also sued Zurich over a coverage denial.

That case is still ongoing—Zurich denied it owed In-N-Out in that instance, and the burger chain has since filed a second lawsuit against the insurer last month, arguing that its losses from closures, particularly in California, have only widened.

Restaurants have argued that their insurance coverage should cover losses from the pandemic because the losses were due to government shutdowns, and not the pandemic itself. Insurers have argued that the policies only cover physical losses.

A federal judge in Ohio in January ruled in favor of a restaurant system there, agreeing with the operator that the shutdown caused the business losses. That could explain why Steak n Shake opted to file its federal lawsuit in that state.

The issue remains a big one for many restaurant and restaurant chains, which lost billions of dollars last year when governments closed dine-in service, hammering sales at many companies.