Business Interruption Coverage Class Action

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A case recently filed with the United States District Court for the District of Massachusetts, Rinnigade Art Works v. Hartford Financial Group, is the first suit in Massachusetts seeking class action status in challenging an insurance company’s denial of coverage for COVID-19 related business losses.

Rinnigade Art Works (“Rinnigade”), a graphic design and screen printing company, purchased an “all-risk” insurance policy from The Hartford Financial Services Group, Inc., Hartford Fire Insurance Company and Twin City Fire Insurance Company (the “Defendants”) which included Extra Expense coverage, Business Income from Dependent Properties coverage, and Civil Authority Coverage. Extra Expense coverage compensates the insured for expenses incurred on account of the physical loss or damage to the insured property. Business Income from Dependent Properties coverage compensates the insured for business income losses resulting from physical loss or damage caused by a covered cause of loss to a dependent property (perhaps a supplier, customer, or property other than the primary insured property). Due to the COVID-19 pandemic, in March 2020 Rinnigade was forced to suspend business operations by orders of Massachusetts civil authorities, who prohibited access to and occupancy of Rinnigade’s building. Rinnigade submitted a claim for coverage of its business losses suffered as a result of these COVID-19 closures. Defendants, however, denied Rinnigade’s claim and refused to pay for the business losses.

On May 7, 2020, Rinnigade filed a complaint against Defendants bringing breach of contract claims for the denial of coverage under Business Income, Extra Expense, and Civil Authority provisions of Defendants’ property insurance policy. Additionally, Rinnigade seeks declaratory judgments that the losses sustained by class members are covered under the aforementioned provisions. Rinnigade contends that its all-risk policy does not contain any exclusions which would justify the denial of coverage, therefore its business losses should be covered.

The proposed classes to be represented by Plaintiff in this class action are entities with Business Income, Extra Expense, Business Income from Dependent Properties, and/or Civil Authority coverage under “property insurance polic[ies] issued by Defendants that suffered a suspension of business operations and for which Defendants has either actually denied or stated it will deny a claim for the expenses [or losses] or has otherwise failed to acknowledge, accept as a covered expense [or loss], or pay for the covered expenses [or losses].” Plaintiffs assert the numerosity, commonality, typicality, adequacy, predominance and superiority requirements for class certification are met because there are so many potential plaintiffs that individual joinder (meaning combining all individual lawsuits filed by potential plaintiffs into one suit) is impracticable, and the proposed class members have all suffered the same issues of loss, denial of coverage, scope of coverage, and damages, and class action suit is the superior available method for resolving these disputes.

Rinnigade included only its insurance policy as an exhibit to the complaint, but not the coverage denial letters it received from the Defendants. We will need to wait until Defendants respond to the complaint to learn Defendants’ reasoning in denying coverage.


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