By Matthew Santoni

Law360 (August 5, 2020, 3:05 PM EDT) -- A hair salon outside Philadelphia has filed suit in Pennsylvania state court against The Hartford Insurance Group, saying the insurer wrongfully denied coverage for business lost during state-mandated closures to slow the spread of the COVID-19 pandemic.

Salon 360, in Upper Moreland Township, Montgomery County, says it closed along with other "non-life-sustaining businesses" by order of Gov. Tom Wolf in March. But it was denied insurance coverage for its lost business under the policy it had purchased from The Hartford subsidiary Sentinel Insurance Company Ltd., according to the complaint filed in the Philadelphia Court of Common Pleas on Tuesday.

"As a result of the above-referenced governmental actions, 360 as suffered a direct physical loss of and damage to its property because it has been unable to use its property for its intended purpose," the complaint said. "Defendant's refusal to provide coverage for losses suffered constitutes breach of contract."

Like hundreds of other businesses across the country amid the pandemic, Salon 360 claims that The Hartford breached its contract and is asking the court for a declaratory judgment that the salon's losses should be covered.

According to the complaint, Salon 360 had a "Spectrum Business Owner's Policy" that provided both "action of civil authority" coverage and "business income and extra expense" coverage when the U.S. government declared a state of emergency due to the coronavirus on March 13 and Wolf issued his closure order March 19.

Salon 360 submitted its claim March 23, and on June 16, The Hartford sent back a letter denying coverage, the suit says. The complaint does not specify why the insurer denied the claim.

"Defendant's June 16, 2020 disclaimer letter precludes coverage for both past, present, and future losses," the complaint said. "Plaintiff's losses continue to accrue as of the filing of this complaint as a result of the governmental actions."

The salon's website said it has since reopened, though it is operating by appointment only and requires customers to wear masks at all times. Montgomery County moved into the state's "green" phase of reopening in late June, which allowed personal care facilities like salons to reopen at half capacity.

Many businesses in Pennsylvania have sued their insurers in state and federal court, seeking to overturn denials based on their insurers' arguments that they didn't suffer physical losses due to the virus, that their policies contained exclusions for contamination by viruses or bacteria or that the closure orders weren't a covered "civil authority" action because the closures didn't restrict employees' access.

In July, an Allegheny County judge had coordinated all the state-court cases against Erie Insurance in her court to decide common issues, though not without objections from some plaintiffs.

"We plan on holding the insurance companies accountable for refusing to provide coverage and abandoning small businesses during these difficult times," said Ashley S. Nechemia, one of the attorneys representing the salon. "Small business owners purchased business interruption coverage with the expectation that their insurance carrier would cover unexpected business losses."

Representatives of The Hartford did not immediately respond to requests for comment Wednesday.

Salon 360 is represented by Robert W. Williams and Ashley S. Nechemia of Mattleman Weinroth & Miller PC.

Counsel information for Sentinel Insurance and The Hartford was not immediately available.

The case is Salon 360 Inc. v. Sentinel Insurance Company Ltd. et al., case number 200800221, in the Court of Common Pleas for Philadelphia County, Pennsylvania.

--Editing by Abbie Sarfo.

Update: This article has been updated with comment from the plaintiff's attorney.

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