Michigan Suit Says Insurer Owes Commercial Premium Refund Due to Virus

In a class action lawsuit, a Michigan restaurant and bar has challenged its insurer over commercial policy premium payments that covered the time it was forced to shut down during the COVID-19 pandemic. The lawsuit requests premium refunds and other relief.

In Flo’s Pizzeria & Sports Bar v. EMC Insurance, Belmont, Michigan-based Flo’s Pizzeria seeks restitution not only for itself but for all members of a class that bought commercial insurance policies from EMC, including commercial liability, commercial auto and commercial umbrella, and have not been given any premium relief for the periods they were ordered to close their doors by public authorities in order to slow the spread of the pandemic.

Flo’s Pizzeria cited the example of auto insurers that have offered refunds and discounts to drivers nationwide after the widespread stay at home orders caused an extreme drop in the miles driven by auto policyholders across the nation.

“Like automobile policyholders, as a result of the widespread stay-at-home orders, Plaintiff has experienced a ‘radical reduction’ in its exposure to potential claims under the Policy, as evidenced by its reduced hours of operation, limited operation, and receipts during the effective period for the stay-at-home orders,” the lawsuit states.

Flo’s Pizzeria purchased commercial liability, commercial auto and commercial umbrella policies from EMC that are effective from Jan. 23, 2020, to Jan. 23, 2021.

Due to Michigan’s stay at home order, Flo’s closed its dining room to the public from March 16 through June 8, resulting in a significant revenue loss, as well as greatly reduced exposure to loss, the suit maintains. Because Flo’s Pizzeria “has experienced a significantly lower exposure rate due to COVID-19,” it “overpaid for its premiums when the policies were written,” the lawsuit states.

Businesses all over the country have experienced similar losses, the lawsuit explains. “Class members are so numerous that their individual joinder is impracticable. The precise number of Class members and their identities are unknown to Plaintiff at this time, but EMC is in the top 60 property/casualty organizations in the United States,” it states.

The suit alleges that EMC has disregarded provisions in its policies that state “the premium is an estimate, that it is possible to overpay.” As such, “EMC is required to return overpayments by the class,” the suit says.

Among other things, the lawsuit alleges breach of contract, unjust enrichment and breach of good faith by EMC and requests declaratory and injunctive relief, as well as a jury trial.

The lawsuit was filed on July 10 in the U.S. District Court for the Western District of Michigan, case number 1:20-cv-00626.

In an emailed reply to Insurance Journal, EMC Insurance Director of Community Involvement Sarah Buckley said the company does not comment on pending litigation.