Diner Says Missing Exemption Entitles It To COVID-19 Payout

By Clark Mindock
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Law360 (April 20, 2020, 9:32 PM EDT) -- A Chicago-area diner says its insurer omitted an industry-recommended exemption for coverage due to a virus and that the missing exemption means it's entitled to coverage for lost revenue from the COVID-19 pandemic.

In a proposed class action filed Sunday on behalf of other Illinois restaurants and bars covered by Erie Insurance Co., Chicago area PGB Restaurant Inc. says Erie is wrongly refusing to cover lost income and extra expenses the diner has incurred after it closed under a statewide public health order.

PGB, which operates as Mother's Day Restaurant, says unlike what is often seen in other insurance policies, the specific policies purchased by the restaurant and other businesses don't include virus exemptions for lost income. The Insurance Services Office, a leading industry advisory board, began recommending the exemption following the SARS outbreak, but Erie didn't include it in the policy it sold to PGB, according to the complaint.

"We have companies that chose this insurance, and now it's time for the underwriters to provide this coverage, and they're not doing it," said Christopher Esbrook of Esbrook Law LLC. "We're just holding them to provide the benefit of the bargain that they have been paying for all along."

The suit is seeking financial relief from the insurance company and a judgment that the lost income directly results from property loss or damage.

A spokesperson for Erie said Monday that it doesn't comment on ongoing litigation, but that business interruption insurance "is generally not designed or priced to include pandemic outbreaks and premiums are not collected based on providing coverage against communicable diseases."

PBG says it estimates there are hundreds "and likely thousands" of other businesses in the same boat that it wants to be part of the class.

The suit is the latest in a string of similar complaints sparked by the pandemic that has resulted in stay-at-home orders and the shuttering of "nonessential" businesses in states across the country.

Those other suits include complaints filed on behalf of restaurants and companies in states across the country experiencing mandatory shutdowns.

For instance, two pubs in Pittsburgh filed complaints against Erie Insurance on Friday, claiming the insurance company has ignored the harms caused by the mandatory closures.

In Florida, a restaurant group with locations in Miami and elsewhere in the state has sued Lloyd's of London, claiming that their all-risk insurance plans should cover the catastrophic impacts of the coronavirus closures. A movie theater company in Texas also sued Lloyd's, claiming it paid a premium for its policies knowing how devastating a pandemic could be.

The attorneys representing PGB Restaurant Inc. have filed a similar suit against the Wisconsin insurance company Society Insurance.

PGB Restaurants Inc. is represented by Robert R. Duncan and James H. Podolny of Duncan Law Group LLC, as well as Christopher J. Esbrook and Michael Kozlowski of Esbrook Law LLC.

Counsel information for Erie was not immediately available.

The case is PGB Restaurant Inc. et al., v. Erie Insurance Company, case number 1:20-cv-02403, in the U.S. District Court for the Northern District of Illinois.

--Additional reporting by Joyce Hanson, Matthew Santoni and Mike Curley. Editing by Haylee Pearl.

For a reprint of this article, please contact reprints@law360.com.

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Case Information

Case Title

PGB Restaurant, Inc. v. Erie Insurance Company

Case Number



Illinois Northern

Nature of Suit

110(Contract: Insurance)


Honorable Matthew F. Kennelly

Date Filed

April 19, 2020

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