The Boston-based restaurant chain says Strathmore Insurance Co. rejected its damages claim under its "business interruption policy."
CEO Roger Berkowitz says when the pandemic hit, his restaurants were forced to shutdown, resulting in 3,100 furloughs and other business losses.
"We enacted our business interruption insurance and it was promptly rejected," Berkowitz tells WBZ.
Berkowitz says that in rejecting the claim, the insurance company said, "Your policy was issued March 1, well after it was known that the pandemic was in effect, and there were no exclusions for it."
After seeking legal advice, Berkowitz said he determined Legal had a case.
"Most insurance companies now are just flatly denying without looking into it," Berkowitz says.
Insurers have been writing a pandemic exclusion into some business interruption contract since the SARS outbreak in 2003, according to The Boston Globe.
Legal Sea Foods filed its lawsuit Monday in federal court in Boston, an action that has been taken by a number of businesses across the country, Berkowitz says. His family opened its first restaurant in 1968, and now operates 34 restaurants in Massachusetts, New Jersey, Pennsylvania, Rhode Island, Virginia and Washington D.C.
A network of Boston area restaurant owners called Mass Restaurants United has thrown its support behind legislation on Beacon Hill that would require insurers to cover losses from the pandemic.
WBZ NewsRadio has not received a response for comment from Strathmore Insurance.
WBZ NewsRadio's Jim MacKay reports: