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Lawsuits & Litigation

Owner of Cheers is Suing Insurance Providers Over Denied Claims from COVID-19 Shutdowns

— August 3, 2020

Hampshire House, the company that owns Cheers and other Boston-area restaurants, is suing various insurance providers over denied claims filed in response to the COVID-19 shutdown.

Hampshire House, the owner of a slew of Boston restaurants, including Cheers, filed a lawsuit against a handful of its insurance providers over “denied business interruption claims it filed in response to the coronavirus pandemic shutdowns as the company navigates estimated losses of millions of dollars.” The suit was filed earlier this week against Fireman’s Fund Insurance and Associated Indemnity Corporation, and their parent company, Allianz Global Risks United States Insurance Company. The decision to file the suit came after the insurance companies “refused to pay the claims on its ‘Property-Gard’ policy.

Closed sign
Closed sign; image courtesy of geralt via Pixabay,

According to the lawsuit, the insurance providers “breached their contract in denying the claims and failed to act in good faith.” As a result, Hampshire House is seeking unspecified damages. In addition to owning both Cheers, the corporation also owns Hampshire House, 75 Chestnut, 75 on Liberty Wharf, and a Boston-area distribution center. At the moment, Hampshire House employs about 290 employees. However, earlier this year, every restaurant under the corporation’s umbrella was forced to shutter its doors when the COVID-19 pandemic took over.

According to the suit, the Hampshire House “carries over $10 million in business interruption insurance and already estimates losses valued at several million dollars.” Additionally, throughout the pandemic, the company has “continued to pay six-figure insurance premiums.” The suit further noted that Cheers also relies on tourism to help keep it in business. The suit states:

“Hampshire (like others who purchase business interruption insurance) has faithfully paid its premiums. Yet, when Hampshire made a claim because of a catastrophic business interruption caused by state and local emergency orders, the defendants summarily and arbitrarily denied Hampshire’s claims. Hampshire (like many businesses) has relied on its business interruption insurance to cover what it is supposed to cover – replacement of business income and payment of ongoing expenses in order to rebuild its businesses.”

The company further argued that the insurance providers failed to make a “good faith investigation, determine coverage and adjust Hampshire’s claims because defendants reached a pre-determined conclusion to deny coverage.” Additionally, attorneys representing the company pointed to a post published on Allianz’s website about COVID-19-related claims handling. Specifically, the post reads:

“In general, any standard property and business interruption coverage must be triggered by physical loss or damage to property at an insured location and infectious disease is usually not a covered peril.”

The suit argues the practice has resulted in the “improper denial of countless business interruption claims, including those from Hampshire House.” When commenting on the case, Tucker Merrigan, one of the attorneys representing Hampshire House, said “insurers cannot deny a claim based on contradictory and ambiguous language.” He added:

“Insurance carriers sell contracts they write for money. These contracts are hundreds of pages long. The courts have long held that if there is ambiguity or attempted catch-all language to cover their bottom line, such language doesn’t apply.”

Peter Merrigan, another attorney representing the company, chimed in and said:

“While the insurance industry may cry afoul about their bottom line, too many small business owners, restaurant owners, gym owners, hotel owners, and medical providers are staring bankruptcy in the face. This is a survival moment and all options must be on the table.”


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