SF restaurant reaches rare settlement with insurance company over COVID-related losses

The settlement could encourage other restaurants to take legal action when claims are denied.

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Friday, December 16, 2022
SF restaurant wins lawsuit against insurance group over COVID losses
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San Francisco restaurant John's Grill has won a settlement after its lawsuit against the Hartford Group over COVID-related business losses.

SAN FRANCISCO (KGO) -- It's the first victory of its kind against an insurance company that refused to pay a COVID claim in California. John's Grill, one of San Francisco's oldest restaurants, has settled its lawsuit against the Hartford group. The payout is said to be in the millions.

March 2020, John's Grill was ordered by the city and county to close due to the spread of the coronavirus. 54 employees were told to go home.

"That was one of the hardest days of my life. I had to look at the family in the eye and tell them that we were going to have to shut down for an undisclosed amount of time," explained John Konstin of John's Grill.

The restaurant quickly filed a claim with their insurance company, Hartford Financial Services Group. The insurance company wasted no time in responding.

MORE: Insurance companies deny COVID-19 claims, but cover vandalism damage

"The said, essentially, that we're not covering you under this COVID virus," revealed Joe Cotchett, the attorney who represented the restaurant in its lawsuit against Hartford.

The insurance companies have said that the losses had to be related to "physical" damage to the restaurant, i.e. fire, vandalism. But in the lawsuit, the attorneys argued that the policy included Business Interrupted Coverage.

Who caused the interruption? The city and county of San Francisco, by forcing all businesses to close. Now, remember the word "physical?" Because COVID is a very contagious virus, it created direct "physical" damage and dangerous conditions to the property and people.

"It was just not a virus flying through the air. Everything, every table, every chair, everything had to be cleaned, dishes had to be redone, people had to be called in to clean the entire restaurant after someone would leave," added Cotchett. Hence the term "physical" damage.

MORE: San Francisco retailer files COVID-19 class action lawsuit against insurance company

When this was brought to an appeals court, the justices asked for more legal arguments from both parties. That's when Hartford decided it was time to settle with John's Grill for an undisclosed amount.

Hartford did not return our calls for comment.

"I guess someone said we could end up here with a very bad decision that will affect us throughout the state of California, so they were looking at huge, huge loses," said Cotchett.

John's Grill said the money obtained through the settlement will go to the employees affected by the closure and to the culinary program at City College San Francisco. The family has contributed a lot to the college over the years.

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