FL_3062 Page 1 of 7

April 13, 2020

KEDZIE BOULEVARD CAFE INC DBA

SCOFFLAW

3201 W ARMITAGE AVE

CHICAGO IL 60647

Claim Number: P4066664

Insured: KEDZIE BOULEVARD CAFE INC DBA SCOFFLAW

Claimant Name: KEDZIE BOULEVARD CAFE INC DBA SCOFFLAW

Date of Loss: 03/15/2020

Type of Loss: OTHER

Location of Loss: 3201 W ARMITAGE AVE, CHICAGO, IL 60647

Policy Number: ROP 451854

Society would like you to know that we appreciate and value you as a customer. We regret to inform 

you, however, that Society will have to deny your claim because there is no insurance coverage for this 

claim under the Society Policy for the reasons discussed below. 

 

I. THE CLAIM

 

We summarize the facts based upon Society's investigation to-date as well as the materials we have 

received. If you have any additional materials or information that you believe is relevant to this claim or 

that you would like us to consider, please send it for our review. 

 

Within the past few days, local, state and federal governments have requested businesses to shut 

down to the general public in order to reduce the spread of COVID-19. 

 

II. REASONS FOR DISCLAIMER OF COVERAGE

 

We have investigated your claim, and after careful review of the claim and the Society Policy we have 

concluded that there is no coverage for your claim. 

 

A. Not a Covered Cause of Loss 

 

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KEDZIE BOULEVARD CAFE INC DBA

SCOFFLAW

The Businessowners Special Property Coverage Form of the Society Policy insures a direct physical 

loss or damage to Covered Property at the premises caused by or resulting from a Covered Cause of 

Loss within the policy period. 

 

Relevant Policy Language, Form TBP2 (05-15) 

 

A. Coverage 

3. Covered Causes of Loss 

Direct Physical Loss unless the loss is excluded or limited under this coverage 

form. 

 

A Covered Cause of Loss is a direct physical loss not otherwise excluded or limited by the policy. A 

slowdown in business due to the public's fear of the coronavirus or a suspension of business because a 

governmental authority (i.e. the governor or the mayor) has ordered or recommended all or certain 

types of businesses to close is not a direct physical loss. In addition, the actual or alleged presence of 

the coronavirus is not a Covered Cause of Loss. 

 

B. No Coverage Under Additional Coverage, A.5(k) Civil Authority

 

The Society Businessowners Special Property Coverage Form includes Civil Authority additional 

coverage (Section A. 5(k)), which insures only for actual loss of Business Income and Extra Expense 

caused by an action of civil authority that prohibits access to the described premises when “a Covered 

Cause of Loss causes damage to property other than property at the described premises.” 

 

Relevant Policy Language, Form TBP2 (05-15) 

 

A. Coverage 

5. Additional Coverages 

g. Business Income 

1. Business Income 

*** 

(c) Business Income means the: 

(i) Net Income (Net Profit or Loss before income taxes) that 

would have been earned or incurred if no physical loss or 

damages had occurred, but not including any Net Income that 

would likely have been earned as a result of an increased in the 

volume of business due to favorable business conditions caused 

by the impact of the Covered Cause of Loss on customers or on 

other businesses; and 

(ii) Continuing necessary operating expenses incurred. 

*** 

h. Extra Expense 

*** 

(2) Extra Expense means expense incurred: 

(a) To avoid or minimize the suspension of business and to continue 

“operations”: 

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KEDZIE BOULEVARD CAFE INC DBA

SCOFFLAW

(i) At the described premises; or 

(ii) At replacement premises or at temporary locations, including 

relocation expenses, and costs to equip and operate the 

replacement or temporary locations. 

(b) To minimize the suspension of business if you cannot continue 

“operations” 

(c) To: 

(i) Repair or replace any property; or 

(ii) Research, replace or restore the lost information on damages 

“valuable papers and records” 

(3) With respect to the coverage provided in this Additional Coverage, 

suspension means: 

(a) The partial slowdown or complete cessation of your business 

activities; or 

(b) That a part or all of the described premises is rendered 

untenantable if coverage for Business Income applies 

*** 

k. Civil Authority (7) 

When a Covered Cause of Loss causes damage to property other than 

property at the described premises, we will pay for the actual loss of 

Business Income you sustain and necessary Extra Expense caused by 

action of civil authority that prohibits access to the described premises, 

provided that both of the following apply: 

(1) Access to the area immediately surrounding the damaged property is 

prohibited by civil authority as a result of the damage, and the described 

premises are within the area; and 

(2) The action of civil authority is taken in response to dangerous physical 

conditions resulting from the damage or continuation of the Covered 

Cause of Loss that caused the damage, or the action is taken to enable a 

civil authority to have unimpeded access to the damaged property 

 

Civil authority coverage for Business Income will begin immediately after the 

time of the first action of civil authority that prohibits access to the described 

premises and will apply for a period of up to four consecutive weeks from 

the date on which such coverage begins. 

*** 

The definitions of Business Income and Extra Expense contained in the 

Business Income and Extra Expense Additional Coverages also apply to this 

Civil Authority Additional Coverage. The Civil Authority Additional 

Coverage is not subject to the Limits of Insurance.

 

The Civil Authority additional coverage requires that a Covered Cause of Loss cause damage to 

property other than the property at the described premises, and that access to the area immediately 

surrounding the damaged property is prohibited by a civil authority. There is no coverage here 

because, as detailed above, Coronavirus is not a Covered Cause of Loss, and because a civil authority 

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SCOFFLAW

has not prohibited access to your business because of a Covered Cause of Loss that caused damage 

to a premises other than the described premises. 

 

C. No Coverage Under Additional Coverage, A.5(m) Contamination 

 

Society Businessowners Special Property Coverage Form also includes additional coverage for 

Contamination (Section A. 5 (m)). 

 

Relevant Policy Language, Form TBP2 (05-15) 

 

A. Coverage 

5. Additional Coverages 

m. Contamination (8) 

If your “operations” are suspended due to “contamination”: 

(1) We will pay for your costs to clean and sanitize your premises, 

machinery and equipment, and expenses you incur to withdraw or recall 

products or merchandise from the market. We will not pay for the cost or 

value of the product. 

 

The most we will pay for any loss or damage under this Additional 

coverage arising out of the sum of all such expenses occurring during 

each separate policy period is $5,000; and 

 

(2) We will also pay for the actual loss of Business Income and Extra 

Expense you sustain caused by: 

(a) “Contamination” that results in an action by a public health or other 

governmental authority that prohibits access to the described 

premises or production of your product. 

* * * 

(c) Publicity resulting from the discovery or suspicion of contamination. 

 

Coverage for the actual loss of Business Income under this section will begin 

immediately upon the suspension of your business operations and will 

continue for a period not to exceed a total of three consecutive weeks 

after coverage begins. 

 

[....] The definitions of Business Income and Extra Expense, contained in the 

Business Income and Extra Expense Additional Coverages section shall also 

apply to the additional coverages under this section. 

 

(4) Additional Definitions: 

(a) “Contamination” means a defect, deficiency, inadequacy or 

dangerous conditions in your products, merchandise, or premises. 

*** 

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(d) “Publicity” means a publication or broadcast by the media, of the 

discovery or suspicion of “contamination” at a described 

premise. 

 

The Contamination Coverage provides that Society will pay for costs to clean and sanitize the 

premises, up to $5,000, if the insured's operations are suspended due to “contamination.” 

Contamination is defined as “a defect, deficiency, inadequacy or dangerous conditions in your products, 

merchandise, or premises.” Coverage is provided for loss of business income for a period of up to 

three consecutive weeks after the suspension of the insured's business operations. The Contamination 

coverage also covers an actual loss of Business Income and Extra Expense only if caused by (1) 

“`Contamination' that results in an action by a public health or other governmental authority that 

prohibits access to the described premises;” or (2) “Publicity resulting from the discovery or suspicion of 

contamination.” “Publicity” is defined as “a publication or broadcast by the media, of the discovery or 

suspicion of `contamination' at a described premises. 

 

There is no coverage under Section A.5(m) because no government authority has prohibited access to 

the described premises because of “contamination,” as that term has been defined in the policy, and 

likewise there has been no publication or broadcast by the media of a “contamination” at the described 

premises. Your business operations have not been suspended, nor has access to your premises been 

prevented, by a public health authority or other governmental authority because of a “defect, deficiency, 

in adequacy or dangerous condition” in any of your products, merchandise or premises. In addition, 

there has been no publication or broadcast by the media of any such “defect, deficiency, in adequacy or 

dangerous condition” in any of your products, merchandise or premises. 

 

D. No Coverage Under the Product Spoilage Endorsement (TBP12)

 

Product Spoilage is an additional coverage provided by endorsement TBP-12, which requires a specific 

and unique Spoilage Covered Cause of Loss and is subject to its scheduled limits and deductibles. 

 

Relevant Policy Language, Form TBP12 (05-15) 

 

I. Spoilage 

A. Coverage 

1. We will pay for your loss of "perishable stock" due to spoilage caused by a 

Spoilage Covered Cause of Loss, as provided by this endorsement. 

2. Subject to all the provisions and conditions under the Businessowners 

Special Property Coverage Form, we will also pay for loss of Business Income or 

Extra Expense at the described premises resulting from loss of "perishable stock" 

due to spoilage caused by a Spoilage Covered Cause endorsement. 

 

We cover only the location(s) and limits specified in the Declarations or that is 

indicated in the Schedule. 

3. If a limit for Spoilage in Vehicles is shown in the Schedule, Spoilage coverage is 

extended to cover "perishable stock" in your vehicles which you own or operate 

and are equipped with refrigerating, cooling or humidity control apparatus. 

B. Spoilage Covered Causes of Loss 

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KEDZIE BOULEVARD CAFE INC DBA

SCOFFLAW

Subject to the exclusions described in Item C. of this section, Spoilage Covered 

Cause of Loss means the following: 

1. Spoilage caused by or resulting from: 

a. Change in temperature or humidity resulting from mechanical breakdown 

or mechanical failure of refrigerating, cooling or humidity control apparatus or 

equipment, only while such apparatus or equipment is at the described 

location; or

b. Contamination by a refrigerant, only while the refrigerating apparatus or 

equipment is at the described location; or

c. Power Outage, meaning change in temperature or humidity at the 

described location resulting from complete or partial interruption of electrical 

power, either on or off the described premises, due to conditions beyond your 

control.

2. Spoilage coverage applies to "perishable stock" at the described premises which 

is:

a. Owned by you and used in your business; or

b. Owned by others and in your care, custody or control except as otherwise 

provided in Loss Payment Property Loss Condition E.5.d.(3)(b).

 

Spoilage Covered Cause of Loss is limited to a change in temperature or humidity due to a mechanical 

breakdown or failure of equipment, or contamination by a refrigerant or power outage. The spoliation 

coverage applies only to “perishable stock” at the described premises owned by you and used in your 

business or owned by others and in your care custody and control. 

 

Your claim of alleged COVID-19 (Coronavirus) exposure or spoilage from the inability to use your 

perishable stock is not a result of change in temperature or humidity due to a mechanical breakdown or 

failure of equipment, or contamination by a refrigerant or power outage and therefore is not a Spoilage 

Covered Cause of Loss. 

 

III. CONCLUSION

 

While Society values you as a customer and understands the difficulty of running a business in these 

challenging times, Society must deny your claim for the reasons discussed above. As mentioned, if 

you have any other information that you wish us to consider, please forward it to my attention. 

 

Please be advised that by its acknowledgment and investigation of the reported loss Society is 

not waiving any other rights or defenses in connection with this matter. Society reserves the right to 

supplement and/or amend this letter in the future and to assert any additional defenses, whether 

specifically enumerated herein, that may be applicable now or in the future. 

 

If you have any questions or concerns, please contact me.

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April 13, 2020

P4066664

KEDZIE BOULEVARD CAFE INC DBA

SCOFFLAW

Bill Bunzel, CPCU, AIC

VP-Property, Auto, & Liability Claims

Phone: 888-576-2438, ext. 5731

Department Fax: 920-922-9810

Email: bbunzel@societyinsurance.com

csd

Part 919 of the Rules of the Illinois Department of Insurance requires that our company advise you 

that, if you wish to take this matter up with the Illinois Department of Insurance, it maintains a 

Consumer Division in Chicago at 122 S. Michigan Ave., 19th Floor, Chicago, Illinois 60603 and in 

Springfield at 320 West Washington Street, Springfield, Illinois 62767.

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