A pioneer Key West business family accused Illinois-based Zurich American Insurance Co. of wrongfully denying coverage for over $10 million in business losses blamed on closures imposed during the coronavirus pandemic.

Spottswood Cos. Inc., owner of Florida Keys staples such as the Key West Marriott Beachside Hotel, the Faro Blanco Resort & Yacht Club in Marathon and the Quiet Storm shop on Key West's famous Duval Street, sued Zurich American for two counts of declaratory relief. Zurich American is the U.S. subsidiary of Switzerland's Zurich Insurance Group Ltd.

Spottswood, which also develops and manages real estate, focuses on hotels, stores, marinas, restaurants and hotels in the Keys. The Spottswood family founded the company in 1992 but the family traces its roots in Key West back 150 years to Col. Walter C. Maloney Sr., a future state lawmaker and federal marshal, according to the company's website. Both Maloney Sr. and his son served as Key West mayors.

"As one of the largest employers in the entire Florida Keys, this is a company looking out for its employees as well as providing tremendous service to the economy," said attorney John Leighton, who filed Spottswood's lawsuit July 8. "They spent hundreds of thousands of dollars on an all-risk insurance to protect themselves from this."

Leighton, managing partner at Leighton Law in Miami and Orlando, filed the suit in federal court with attorney Jay Levy of Jay M. Levy Attorneys At Law in Miami. The case was assigned to U.S. District Chief Judge K. Michael Moore.

Zurich American's media relations staff had no comment by deadline.

Spottswood, which paid $216,000 in premiums, said its one-year, all-risk policy purchased last December covered everything except flood and windstorm damage.

The policy covers lost income caused by suspension of business under a time-element provision and a civil or military order that prevents access to its properties.

The coronavirus onset in Florida in March prompted state and local orders to close nonessential businesses, dealing a blow to the state's $90 billion tourism and hospitality industry.

Monroe County closed the Florida Keys to visitors March 20, and Gov. Ron DeSantis ordered the closure of all nonessential businesses March 30.

Spottswood said it sent Zurich a formal notice May 5 describing its losses but Zurich denied the claim, saying direct physical losses hadn't occurred and the claim was excluded under certain policy provisions.

Zurich isn't the only insurance company denying claims for COVID-19-related losses. Dozens of policyholders nationally have file lawsuits challenging the denial of insurance claims.

"All the insurance companies are basically saying the same thing and, because the insurance industry is exempt from antitrust laws, they are doing what insurance companies do, which is colluding and denying every claim," Leighton said. "First they string you along saying they are investigating and then deny the claim."

Read the complaint: