In-N-Out Burger, an all corporate chain, is arguably the best burger joint in America. (When you factor in speed and price, there really is not much argument.) Like many other restaurants, In-N-Out has suffered massive financial losses due to Coronavirus.
Late last week, In-N-Out sued its insurance carrier, Zurich American Insurance Company, for breach of contract for failure to pay In-N-Out for business interruption insurance.
Business interruption insurance is supposed to provide funds to businesses in the event that the business cannot operate. Like all contracts, the key to determining whether In-N-Out will be successful comes down to the precise language of the document.
In-N-Out says the Zurich contract has language that covers “entirely unknown and novel risks that may arise which were not previously considered by the company, Zurich or by the public at large.” Also, there were no exclusions for viruses or infectious diseases and the policy covered “an order of civil or military authority that prohibits access to the location.”
Most business interruption policies have exemptions and are not so broad. This case will hinge on whether the parties intended for this coronavirus partial closing of the restaurant to be covered. Specifically, is a restaurant being open for drive thru only during a government order to be closed for dine in enough to fit the “prohibiting access to the location” language? In-N-Out thinks so and has a pretty good claim from the looks of it.
Like the vast majority of litigation, this case will likely settle for a number we will not find out. We shall see.