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Law360 (July 10, 2020, 6:04 PM EDT) -- A Michigan sports bar sued EMC Insurance on Friday, saying that because it had to drastically curtail its operations during government-mandated shutdowns to stem COVID-19, the insurer should refund the premiums it received for liability insurance during that time.
1259 Post LLC, which runs Flo's Pizzeria & Sports Bar in Belmont, Kent County, told the court in the proposed class action that, as auto insurers have already done, EMC and other insurers should take into account that the shutdowns have significantly reduced the exposure of businesses, which should in turn reduce how much they have to pay for insurance.
As of April, auto insurers had refunded or planned to refund more than $6.5 billion to policyholders who are doing far less driving as a result of the stay-at-home orders, and business insurers like EMC should follow suit, according to the complaint.
"Despite a comparable drop in insurable conduct, insurers have not offered any sort of premium relief to businesses, even though they also have experienced a substantial reduction in business and exposure due to COVID-19," the bar wrote. "Thus, while insurers offer billions of dollars in insurance premium relief to automotive policyholders, they are offering no premium relief to businesses that are experiencing a similar reduction in exposure."
The bar wrote that its insurance premium is based in part on its employee count, payroll and gross sales, all of which have been affected during the pandemic, adding that its policy with EMC acknowledges the possibility that the insurer may overcharge and have to adjust premiums during the policy period.
According to the complaint, Flo's Pizzeria closed its dine-in area between March 16 and June 8 in response to the stay-at-home orders, significantly reducing its revenue compared to the same period in 2019.
The bar has three policies with EMC, according to the complaint: a liability policy for which it paid $4,317 in premiums; a commercial auto policy for which it paid $10,040; and a commercial umbrella policy for which it paid $1,266.
"As a result of the COVID-19 pandemic, plaintiff's current exposure is a dramatic departure from plaintiff's exposure when it purchased its policies from defendant, and materially changed the underwriting guidelines applicable to plaintiff," the bar told the court.
In the proposed class action, the bar seeks to represent all entities who purchased liability, commercial auto and umbrella policies from EMC that were subject to a stay at home order, with claims of breach of contract, unjust enrichment, breach of covenant of good faith, and injunctive relief.
Representatives for the bar and for EMC Insurance could not immediately be reached for comment Friday.
1259 Post is represented by M. Blake Heath of Trial Attorney LLC.
Counsel information for EMC was unavailable.
The case is 1259 Post LLC d/b/a Flo's Pizzeria & Sports Bar v. EMC Insurance, case number 1:20-cv-00626, in the U.S. District Court for the Western District of Michigan.
--Editing by Peter Rozovsky.
For a reprint of this article, please contact reprints@law360.com.
