Chubb logo. Credit: II.studio/Shutterstock

A South Florida restaurant forced to close under COVID-19 stay-at-home orders filed a putative class action Monday accusing the world's largest property casualty insurer Chubb Ltd. and its subsidiary Westchester Surplus Lines Insurance Co. of systematically refusing to honor business-interruption policies, in what it calls a "blatant breach" of contract.

Named plaintiff Cafe International Holding Co. LLC, which owns IT Italy in downtown Fort Lauderdale, has retained Steven Marks of Podhurst Orseck and Stephen Zack of Boies Schiller Flexner to represent it in the putative class suit against New Jersey-based Chubb.

Hundreds of thousands, "if not millions," of policyholders could be affected, according to the plaintiffs team, who said the stakes are high.

"If we are unable to prevail in this particular case with such a clear policy, that means every insurer will get off the hook and avoid meeting its obligations, even though it collected premiums for years and years," Marks said.

IT Italy's "all-risk" property insurance policy said, "We will pay you for the actual loss of business income you sustain due to the necessary 'suspension' of your 'operations' during the 'period of restoration,'" according to the complaint in the Southern District of Florida.

It also provided for "extra expense" and "civil authority" coverage, which takes care of additional costs and loss of income if authorities block access to the restaurant, according to the complaint.

Because the policy doesn't specifically exclude interruptions caused by viruses, microorganisms or pandemics, the lawsuit claims Chubb is liable.

Unconstitutional?

Zack and Marks point to Florida law, which says any ambiguities in insurance policies must be construed in the policy holder's favor. While many insurance companies altered policies after disease outbreaks in 2006, they claim the defendants instead chose to charge higher premiums.

Chubb, headquartered in Warren, declined to comment on the litigation, citing company policy. But CEO Evan Greenberg has said he'll fight claims like this one, arguing that forcing insurance companies to shoulder COVID-19 costs is "plainly unconstitutional."

But the biggest challenge for class members is the urgency of their situation, according to Zack, particularly when courts are functioning remotely and at partial capacity.

"There's no reason that, in light of the injunctive relief that we're seeking here, the court shouldn't be dealing with this as soon as possible," Zack said.

'What lawyers are supposed to do'

Because small businesses are losing billions for every month of lockdown, the plaintiffs team say insurance coverage could mean the difference between surviving or closing for good.

But while many might assume challenging Chubb is a lost cause amid COVID-19, Zack says it's not.

"This is exactly what lawyers are supposed to do," Zack said. "People have rights that need to be protected. A lot of people don't ever realize that they have these rights, and part of our responsibility is to tell people who otherwise think they have no option, or that they just have to accept what's being said, that they don't have to accept it because it's not right and they have paid for coverage that they're entitled to."

It's one of many times Zack and Marks have teamed for a class action, including to litigate against Takata over defective airbags.

"The pooling of resources is not only a great collaborative professional experience, but it gives us the resources needed to make sure that insurance companies can't drive us into the ground," Marks said.

And it also helps that "we like each other," Zack said.

The pair says they plan to file similar lawsuits against other insurance companies soon.

U.S. District Judge Marcia Cooke in the Southern District of Florida will preside over the Chubb case.