HOUSTON – A Houston restaurant owner is suing an insurance company for not covering the loss his business has incurred during the coronavirus pandemic.
According to the lawsuit, YBarra Investments is seeking monetary relief in excess of $1 million for losses at four of its restaurants, including Gringo’s Mexican Kitchen, Jimmy Changas and The Lunch Box. The company also owns and operates the Bullrito’s and Burger Libre restaurants.
“Restaurant owners being denied coverage they have been paying for decades is simply not acceptable,” said Al Flores, attorney and president of Houston Restaurant Association.
The lawsuit focuses on YBarra’s business interruption insurance policy and its virus and bacteria exclusion, as purchased from Scottsdale Insurance Company. According to the insurance company, the policy’s virus and bacteria exclusion does not reference pandemics.
The Insurance Services Office said that the “virus” exclusions apply to damage-causing viruses on interior building surfaces.
“Businesses should not take these claim exclusions or insurance company denials at face value, coverage is subject to legal interpretation,” Attorney David Matthews said.
According to the lawsuit, the "ambiguous ‘virus and bacteria’ exclusion in the Scottsdale policy does not refer to pandemics... despite their experience with coverage during SARS and H1N1, neither Scottsdale Insurance Company or agent Terry Slater advised YBarra that coverage would be denied from the loss and damage caused by a virus pandemic outside the insured properties.”
The lawsuit claims that YBarra was further denied coverage under the “civil authority” clause, which ensures against the loss of business income and extra expenses caused by the actions of a civil authority that prohibits access to the insured premises.
“Just as with many other disasters, the insurance industry will not step up and pay valid claims until they are forced to do so by the legal system,” attorney Tim Goss said.
According to the lawsuit, most restaurant owners found out their insurance coverage was pretty much worthless.
“Restaurant owners have been paying for this coverage for decades and the one time they truly need this assistance, they get a boilerplate denial letter from their insurance company,” Flores said. “This is simply not acceptable.”