R-T Specialty LLC on Thursday sought the dismissal of a Kansas City, Missouri, barbecue chain’s lawsuit accusing the wholesale brokerage, along with a retail broker, of not securing insurance that covers revenue lost during the coronavirus pandemic.
R-T Specialty, a unit of Chicago-based Ryan Specialty Group LLC, argues that it was not negligent in placing the coverage and that as a wholesale broker it did not interact with the policyholder directly.
Separately, Auto-Owners Insurance Co. on Thursday filed a motion to dismiss a suit filed in federal court in Alabama by a shoe store that accused the insurer of wrongly denying its pandemic-related business interruption claim.
The case Ja-Del Inc. v. Zurich American Insurance Co., Lovell Sagebrush Insurance Group Inc. and R-T Specialty LLC, filed in state court in Kansas City, is one of numerous cases filed by businesses alleging they are owed business interruption coverage for revenue lost due to government-ordered lockdowns that began in March.
Unlike most of the other cases, however, Ja-Del, which operates Jack Stack Barbecue Restaurants, targeted its brokers in addition to its insurer, accusing them of negligence in not securing broad enough coverage.
The retail broker involved, Lovell Sagebrush, filed a motion to dismiss last week, arguing that it could not have foreseen a pandemic when it placed coverage last year for Ja-Del and that it is not required to predict “every possible gap in insurance coverage.”
In court documents, R-T Specialty said it agreed with Lovell Sagebrush’s analysis of the legal obligations of brokers and added that it did not have a direct relationship with the policyholder.
The wholesaler “assisted Lovell placing the policy by locating and communicating with insurers willing to consider writing the requested coverage. It interacted with Zurich and Lovell but not Plaintiff,” court papers say.
Meanwhile, in the case Wagner Shoes LLC v. Auto-Owners Insurance Co., filed in U.S. District Court for the Northern District of Alabama, Lansing, Michigan-based Auto-Owners argues that the policy it issued to Wagner Shoes only covers lost revenue resulting from “direct physical damage” and that the policy does not include a civil authority provision for losses related to government-imposed restrictions on businesses.
Alabama law “construes ‘direct physical loss’ as more than a mere economic loss; it means a tangible change that results in physical alteration of the property,” court papers say.
More insurance and risk management news on the coronavirus crisis here.
