A restaurant insurance
claim can be a devastating
and life altering event for a
business owner, but for an
insurer, it is routine business.

Restaurant Insurance Claim

Restaurant Insurance Claim

Restaurant Property Insurance Claim

Restaurants are more susceptible to filing property damage claims through their insurance. It is common for insurance companies to deny your insurance claims for many different reasons. Merlin Law Group will review your insurance policy to see if the denied coverage was legitimate. Insurance coverage can be very tricky and finding coverage is the key to making your restaurant whole again. Merlin Law Group with review your denied restaurant insurance claim at no cost to you.

Policyholders need to read and review their policies and be aware of the duties you have once a loss occurs. If you fail to cooperate in good faith with the insurer’s requests in the investigation of a covered loss, your claim could be denied. If you have any questions regarding the duties in your particular policy, it is prudent that you contact an experienced insurance professional for an opinion.

Restaurant Fire Insurance Claim

Restaurant fires are very common. It is strongly encouraged that you review your property insurance policy annually to ensure you have the proper coverage.

A reminder to policyholders, public adjusters, and counsel for policyholders that cleanup and other return to business operations that destroy or alter evidence could lead to a claim denial. The best practice is to get prior approval from an insurer before those activities to avoid this situation.

Restaurant Business Income Loss

Many times when filing a restaurant property insurance claim there is typically business income loss that occurs as a result of the property damage. Getting your restaurant back up and running after a fire or other damage may take years. Be sure to check your insurance policy to ensure you’re collecting what is rightfully owed to you by your insurance company.

Specifically, in one instance a restaurant was shut down due to civil authority ordering an evacuation. The restaurant was without employees or customers and they were denied due to the lack of physical damage to the building. After court they received coverage for the income loss because the storm had caused physical damage elsewhere and civil authority ordered the evacuation. For coverage to apply, the actual business did not have to suffer “direct physical loss” because the policy requirement for a civil authority business income loss required that the policyholder to be prohibited from access to the premises due to direct physical loss of or damage to property, other than at the “covered premises,” caused by or resulting from any Covered Cause of Loss.

Restaurants, food stores and food brokers should also purchase Spoilage Coverage. This provides for losses caused by power outages on or off premises with the following language: Power Outage, meaning change in temperature or humidity resulting from complete or partial interruption of electrical power, either on or off the described premises, due to conditions beyond your control. Power outage is a common and significant threat to businesses. Prudent risk management requires power back-up systems as well as proper insurance coverage for these disasters. Otherwise, a second financial disaster will likely occur.

Boiler and Machinery Insurance

One of the lesser-known insurance contracts is the one especially designed to cover boilers. Boiler insurance or boiler and machinery insurance is a type of casualty insurance covering damage to property of the insured or of others for which the insured may be responsible, and for damages from personal injury or death of any person caused by the explosion or collapse of boiler. One of the questions that arise is whether there was an “accident” or “accidental breakdown” that is covered under the boiler and machinery policy.

These claims are complicated and they often involve interaction and evaluation alongside property insurance policies to determine whether the property or boiler and machinery insurer are responsible for the loss depending on the facts. Then if pursuing the boiler policy, there are pages of limitations and exclusions to which the insurer may direct their investigative efforts. It can be an expert-intensive analysis to appropriately navigate the boiler and machinery claim process and get to the recovery phase.

Efficient Proximate Cause

There is valuable information regarding damage that is a result of a chain of events. This is best explained through an example such as a small restaurant being vandalized. The damage caused by the vandals caused a water leak, which damaged the restaurant’s top floor bathroom and the bottom floor of the property. The damage was extensive, and the restaurant retained a water remediation company that same day. The restaurant’s owner retained a public adjuster who he used in the past, and the claim was presented to the carrier. The carrier immediately changed the focus of the claim from the covered peril of vandalism to the excluded peril of water damage. The insurer denied coverage based on the insurance policy’s water loss exclusion.

This case presents a chain of events issue, which is often referred to as the efficient or predominate cause fact pattern. The first step in analyzing coverage in such a case is to determine whether the initial cause is covered under the insurance policy. Sometimes the initial event, vandalism in this case, is covered. However, the following event, water leak in this example, could be an excluded cause of loss under the insurance policy.

Coverage could exist under the efficient proximate cause doctrine. This has been widely interpreted to mean, “the immediate not the remote cause is considered.” The proximate cause is the efficient cause, the one that necessarily sets the other causes in operation. The causes that are merely incidental or instruments of a superior or controlling agency are not the proximate causes and the responsible ones, though they may be nearer in time to the result.

Vandalism is the “but for” or cause that set the restaurant’s loss in motion, so the resulting water damage, should be covered. These are two different results of a chain of events claim and it is important to be aware that an initial denial does not mean you cannot receive coverage for an excluded cause of loss.


If your restaurant insurance policy claim has been denied, delayed or unpaid, please call The Merlin Law Group toll-free anywhere in the nation at 877-449-4700. The attorneys at The Merlin Law Group have extended experience in these cases and welcome a review of your industrial insurance claim free of charge.

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