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Helping Local Businesses in the Fight Against Unscrupulous Insurance Companies

April 29, 2020

With shuttered businesses across the country now receiving denial of coverage letters in response to their business interruption claims, Fears Nachawati is fighting back.

Two bad-faith insurance lawsuits were recently filed on behalf of Salum restaurant in Dallas, as well as Houston-based Frosch International Travel against Travelers Indemnity Company, which rejected both businesses’ claims without investigating what happened. In the case of Salum, Travelers has wrongly claimed the business’ policy excludes damage as a result of “bacteria and viruses.” Salum, however, is covered by a “deluxe” policy which contains no such language. Travelers also claimed the restaurant hasn’t suffered as it offers customers the option of ordering food to-go, despite the fact that this is a new service necessitated by the pandemic.

In regards to Frosch, Travelers denied its claim because the business is still open and has not suffered property damage. This, despite the fact that its policy states that it would cover, “[T]he actual loss of Business Income … sustain[ed] due to the necessary ‘suspension’ of your ‘operations.’” It also promises to cover damages that occur when a business is closed by civil authorities, as has happened across the United States due to the pandemic.

“This is the definition of bad faith,” said Matthew McCarley, one of the Fears Nachawati attorneys representing the two businesses in their respective cases. “Insurance companies like Travelers have systematically taken advantage of loyal policy holders, promising coverage but backing out when businesses need them the most.”

Salum and Frosch are only two examples of businesses across the country to have had claims wrongly denied as powerful insurance lobbyists pressure lawmakers to change the rules after the fact and exempt the industry from pandemic-related liability.

The lawsuits – Salum Restaurant LTD v The Travelers Indemnity Company, case No. 3:20-cv-01034 and Frosch Holdco et al. v The Travelers Indemnity Company, et al., case No. 4:20-cv-0148  – ask for declaratory judgments that Travelers must honor its policies and cover the submitted claims. They also seek damages for breach of contract, violation of the Texas Insurance Code, and breach of Traveler’s duty of good faith and fair dealing.


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