Local small business sues over denied insurance claims related to COVID-19 closures
Insurance company classifies COVID-19 as a “pollutant”
Supporting one another was how many small businesses and organizations made it through the COVID-19 pandemic, but for one Madison-based business, what was supposed to be a partnership between its insurance company and itself has been anything but supportive.
Classy Glass Inc. co-owners Levi Kellogg and Adrian Holtzman understand their glass-blowing business is not exactly COVID-friendly, but they expected a more hospitable relationship with their insurer when the pandemic forced their business to close down.
Classy Glass has retail shops and glass-blowing locations in Madison and Denver, and the Madison Glass Academy and Denver Glass Academy have both been closed since last spring as a result of local public health orders requiring facemasks and social distancing, which has resulted in a loss of more than $500,000.
Kellogg says they were confident their commercial insurance through The Cincinnati Insurance Companies would cover their business interruption. Instead, the insurer is refusing to pay Classy Glass’ business interruption claim by classifying COVID-19 as a “pollutant.”
“Being a small business owner during this time has been a challenge,” Kellogg says. “It’s unfortunate that our situation was made worse by an insurance company that isn’t abiding by the terms of the policy.”
Classy Glass’ insurance policy does not have a pandemic or virus exclusion. “Our policy lacks the clarity of how the pandemic would not be covered,” explains Kellogg. “It also doesn’t make any mention of these words, to say if they are covered or not covered — no mention of [a] pandemic at all. Instead, the insurance company alleges that COVID-19 is a ‘pollutant,’ and pollutants are excludable. Yet, their own definition of a pollutant doesn’t apply to COVID-19.”
Kellogg says Classy Glass has quarterly reviews with its insurance company and the business has coverage for a loss that occurs due to a government-ordered interruption. Their attorney, Chris J. Trebatoski of Treblaw LLC in Milwaukee, told WTMJ-TV that Classy Glass bought two different types of business income loss coverage, and on pages 38 and 83 their policy discusses shutdowns by “civil authorities.”
The Cincinnati Insurance Companies has refused to investigate the claim, even though it is obligated to do so, according to Kellogg. “To this day, the insurance company never come out to do an inspection or to investigate our claims, even though they are required to. Instead, they told us to send the letters from the government and written testimony of our situation.
“We requested they come test our facility to have official documentation if COVID-19 was present at our location,” Kellogg continues. “If the test was positive, we requested they hire a professional cleaning crew to sanitize our location. They refused to not only investigate but also test too.”
The Cincinnati Insurance Companies provided the following statement to IB:
Thank you for reaching out to Cincinnati Insurance. We respect the rights of all parties to have their issues heard and resolved in a court of law. For that reason, we do not comment on pending litigation. Cincinnati Insurance remains committed to doing our part to support the families and businesses in our agents’ communities, helping them to proactively manage risks and promptly paying covered claims.
In response to its insurance claim being denied, Classy Glass filed a lawsuit against The Cincinnati Insurance Companies on April 2 seeking in excess of $75,000 in damages. The Cincinnati Insurance Companies has still not responded to the lawsuit.
“We promptly notified our insurance company about our losses and provided them with all the necessary documentation,” says Kellogg. “They have collected our premiums and now want to redefine the contract. We are looking for indemnification. This will allow us to return to where we were before the pandemic.”
Kellogg notes he and his business partner have learned one important lesson from this experience. “We recommend getting representation and read your policy. If you feel like there is coverage for a loss and your insurance company is not willing to investigate, get representation.
“As a small business owner, you want to feel like the insurance company that you choose has your back,” adds Kellogg. “Like many other small businesses, when COVID hit, we felt at a loss. How were we going to pay the bills? Pay our employees? We asked for just a small amount to get us through. The insurance company didn’t have our back during COVID; [now we wonder] why would they support us any other time?”
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