Chicago Restaurant Management Group, LLC v. Great American Insurance Co.

Plain English (For Everyone)

Your business insurance likely won't cover losses from COVID-19 closures if the policy requires actual physical damage to your property. Courts are generally interpreting these policies strictly, meaning if the pandemic didn't physically harm your building, you probably won't get paid for lost income due to government shutdowns. This ruling confirms that for businesses in Illinois.

For Legal Practitioners

The Illinois Appellate Court affirmed dismissal of business interruption claims stemming from COVID-19, holding that 'civil authority' and 'access' clauses require 'physical loss or damage' to the premises. The court found the policy language unambiguous and not triggered by government orders absent such physical damage. The bad faith claim also failed as a consequence.

For Law Students

This case illustrates the strict interpretation of insurance policy language, particularly 'civil authority' and 'access' clauses. The court held that 'physical loss or damage' is a mandatory prerequisite for business interruption coverage, even when government orders cause closure due to a pandemic like COVID-19. This affirms that unambiguous policy terms will be enforced as written.

Newsroom Summary

An Illinois appeals court ruled that restaurants and other businesses cannot claim business interruption insurance for losses due to COVID-19 government shutdowns if their policies require actual physical damage to the property. The court found that the pandemic itself did not cause the necessary 'physical loss or damage' for coverage.

Standard of Review

De novo review, as the appeal concerns the interpretation of an insurance policy and the application of legal principles to undisputed facts.

Procedural Posture

The plaintiff, Chicago Restaurant Management Group (CRMG), appealed the trial court's dismissal of its breach of contract and bad faith claims against its insurer, Great American Insurance Co. The trial court had dismissed the claims, finding that the insurance policy did not cover business interruption losses due to COVID-19 related government closures.

Burden of Proof

The plaintiff, CRMG, bore the burden of proving that the losses were covered under the terms of the insurance policy. The standard of proof for breach of contract is a preponderance of the evidence.

Legal Tests Applied

Statutory References

Key Legal Definitions

Rule Statements

"The policy language is clear and unambiguous. The 'civil authority' and 'access' clauses require 'physical loss or damage' to the premises as a prerequisite for coverage."

"The COVID-19 pandemic and the resulting government orders did not cause physical loss or damage to the plaintiff's premises as contemplated by the policy."

"Because the plaintiff failed to establish a breach of contract, its claim for attorney fees under section 155 of the Illinois Insurance Code also fails."

Remedies

Affirmance of the trial court's dismissal of the breach of contract and bad faith claims.

Judges

• Mary Jane Theis
• Michael B. Hyman
• Anya T. Schelin

Scenario: My restaurant had to close due to a government order because of COVID-19, and I lost a lot of money. My insurance policy has a 'civil authority' clause. Can I get paid for my lost income?

Your Rights: You likely do not have a right to business interruption coverage if your policy requires 'physical loss or damage' to your premises and the pandemic or government order did not cause such physical damage.

What To Do: Review your specific insurance policy language carefully, paying close attention to definitions of covered events and any requirements for 'physical loss or damage.' Consult with an attorney experienced in insurance disputes to understand your policy's limitations and your legal options.

Is it legal to claim business interruption insurance for COVID-19 losses if my policy doesn't mention physical damage?

Depends. If your policy does not explicitly require 'physical loss or damage' and covers business interruption due to civil authority orders, you may have a claim. However, many policies do contain this requirement, as seen in the Chicago Restaurant Management Group case, making coverage unlikely.

This depends heavily on the specific wording of your insurance policy and the laws of your jurisdiction. This ruling is from Illinois.

For Small Business Owners (Restaurants, Retail, etc.)

Businesses in Illinois that suffered losses due to COVID-19 government-mandated closures are unlikely to recover under their business interruption insurance policies if those policies require 'physical loss or damage' to the premises. This ruling reinforces the need for careful policy review and potentially seeking new coverage.

For Insurance Companies

This ruling provides clarity and support for insurance companies in denying COVID-19 related business interruption claims based on the absence of physical damage. It reinforces their ability to rely on unambiguous policy language to limit payouts for pandemic-related losses.

Q: What is Chicago Restaurant Management Group, LLC v. Great American Insurance Co. about?

Chicago Restaurant Management Group, LLC v. Great American Insurance Co. is a case decided by Illinois Appellate Court on March 5, 2025.

Q: What court decided Chicago Restaurant Management Group, LLC v. Great American Insurance Co.?

Chicago Restaurant Management Group, LLC v. Great American Insurance Co. was decided by the Illinois Appellate Court, which is part of the IL state court system. This is a state appellate court.

Q: When was Chicago Restaurant Management Group, LLC v. Great American Insurance Co. decided?

Chicago Restaurant Management Group, LLC v. Great American Insurance Co. was decided on March 5, 2025.

Q: What is the citation for Chicago Restaurant Management Group, LLC v. Great American Insurance Co.?

The citation for Chicago Restaurant Management Group, LLC v. Great American Insurance Co. is 2025 IL App (1st) 232353. Use this citation to reference the case in legal documents and research.

Q: Did the court rule that insurance companies don't have to pay for COVID-19 business losses at all?

No, the court ruled specifically on policies that require 'physical loss or damage' to the property. If a policy had different wording or explicitly covered pandemics without this requirement, coverage might still be possible.

Q: What does 'physical loss or damage' mean in my insurance policy?

It generally means tangible, actual harm or destruction to your property. For example, a fire causing damage would qualify, but the presence of a virus or a government order to close typically does not meet this definition.

Q: Is Chicago Restaurant Management Group, LLC v. Great American Insurance Co. published?

Chicago Restaurant Management Group, LLC v. Great American Insurance Co. is a published, precedential opinion. Published opinions carry precedential weight and can be cited as authority in future cases.

Q: What topics does Chicago Restaurant Management Group, LLC v. Great American Insurance Co. cover?

Chicago Restaurant Management Group, LLC v. Great American Insurance Co. covers the following legal topics: Business interruption insurance coverage, COVID-19 business interruption claims, Insurance policy interpretation, Civil authority clause in insurance, Direct physical loss or damage requirement, Bad faith insurance claims.

Q: What was the ruling in Chicago Restaurant Management Group, LLC v. Great American Insurance Co.?

The court ruled in favor of the defendant in Chicago Restaurant Management Group, LLC v. Great American Insurance Co.. Key holdings: The court held that the "civil authority" and "access" clauses in the insurance policy did not provide coverage for business interruption losses resulting from COVID-19 related government orders. This was because the policy required "direct physical loss or damage" to the insured property, which was not present.; The court found that the "virus or bacteria" exclusion unambiguously applied to the COVID-19 pandemic, thereby negating coverage for any resulting business interruption losses.; The court affirmed the dismissal of the breach of contract claim, agreeing with the trial court that the policy's terms did not extend to the losses claimed by CRMG.; The court affirmed the dismissal of the bad faith claim, as it was predicated on the breach of contract claim and the insurer's denial of coverage was based on a reasonable interpretation of the policy's unambiguous terms..

Q: Why is Chicago Restaurant Management Group, LLC v. Great American Insurance Co. important?

Chicago Restaurant Management Group, LLC v. Great American Insurance Co. has an impact score of 25/100, indicating limited broader impact. This decision reinforces the trend of Illinois courts denying COVID-19 business interruption claims based on standard policy language requiring physical damage. It provides clarity for insurers and policyholders regarding the interpretation of "civil authority" and "virus" exclusions, signaling that such claims will likely continue to face significant hurdles.

Q: What precedent does Chicago Restaurant Management Group, LLC v. Great American Insurance Co. set?

Chicago Restaurant Management Group, LLC v. Great American Insurance Co. established the following key holdings: (1) The court held that the "civil authority" and "access" clauses in the insurance policy did not provide coverage for business interruption losses resulting from COVID-19 related government orders. This was because the policy required "direct physical loss or damage" to the insured property, which was not present. (2) The court found that the "virus or bacteria" exclusion unambiguously applied to the COVID-19 pandemic, thereby negating coverage for any resulting business interruption losses. (3) The court affirmed the dismissal of the breach of contract claim, agreeing with the trial court that the policy's terms did not extend to the losses claimed by CRMG. (4) The court affirmed the dismissal of the bad faith claim, as it was predicated on the breach of contract claim and the insurer's denial of coverage was based on a reasonable interpretation of the policy's unambiguous terms.

Q: What are the key holdings in Chicago Restaurant Management Group, LLC v. Great American Insurance Co.?

1. The court held that the "civil authority" and "access" clauses in the insurance policy did not provide coverage for business interruption losses resulting from COVID-19 related government orders. This was because the policy required "direct physical loss or damage" to the insured property, which was not present. 2. The court found that the "virus or bacteria" exclusion unambiguously applied to the COVID-19 pandemic, thereby negating coverage for any resulting business interruption losses. 3. The court affirmed the dismissal of the breach of contract claim, agreeing with the trial court that the policy's terms did not extend to the losses claimed by CRMG. 4. The court affirmed the dismissal of the bad faith claim, as it was predicated on the breach of contract claim and the insurer's denial of coverage was based on a reasonable interpretation of the policy's unambiguous terms.

Q: What cases are related to Chicago Restaurant Management Group, LLC v. Great American Insurance Co.?

Precedent cases cited or related to Chicago Restaurant Management Group, LLC v. Great American Insurance Co.: Kroblin v. United States Fidelity & Guar. Co., 2020 IL App (1st) 190977; Traeger Grills, Inc. v. Great Am. Ins. Co., 2023 IL App (1st) 220619-CA.

Q: Does this ruling apply to all business interruption insurance claims in Illinois?

This ruling applies to claims involving 'civil authority' or 'access' clauses that require 'physical loss or damage' and stem from circumstances like the COVID-19 pandemic. Policies with different language may be interpreted differently.

Q: What is the difference between a breach of contract claim and a bad faith claim against an insurer?

A breach of contract claim argues the insurer didn't follow the policy terms. A bad faith claim argues the insurer acted unreasonably or unfairly in denying or handling the claim, often requiring the breach to be proven first.

Q: Why did the court say the 'civil authority' clause didn't apply?

The court found the clause was unambiguous and required 'physical loss or damage' to the premises. Since COVID-19 and the resulting government orders did not cause physical damage to the restaurant, the clause was not triggered.

Q: Can I still sue my insurance company for bad faith if they denied my COVID-19 claim?

In Illinois, as demonstrated in this case, if the underlying breach of contract claim fails because the loss isn't covered by the policy, the bad faith claim typically also fails. The insurer must have acted unreasonably without a proper basis for denial.

Q: What is the standard of review for insurance policy interpretation cases?

Appellate courts review these cases de novo, meaning they look at the case fresh without giving deference to the trial court's decision, because the interpretation of policy language is a question of law.

Q: How does the court interpret insurance policy language?

Courts interpret insurance policies by giving the words their plain and ordinary meaning. If the language is ambiguous, it's construed in favor of the insured; if unambiguous, it's enforced as written.

Q: What is the significance of the statute citation 215 ILCS 5/155?

This citation refers to Section 155 of the Illinois Insurance Code, which allows policyholders to recover attorney fees and other expenses if an insurer vexatiously and unreasonably delays or denies a claim. It's relevant to the bad faith aspect of the lawsuit.

Q: How does Chicago Restaurant Management Group, LLC v. Great American Insurance Co. affect me?

This decision reinforces the trend of Illinois courts denying COVID-19 business interruption claims based on standard policy language requiring physical damage. It provides clarity for insurers and policyholders regarding the interpretation of "civil authority" and "virus" exclusions, signaling that such claims will likely continue to face significant hurdles. As a decision from a state appellate court, its reach is limited to the state jurisdiction. This case is moderate in legal complexity to understand.

Q: What should I do if my insurance company denies my business interruption claim?

First, carefully read your policy to understand the exact reasons for denial and the policy terms. Then, consult with an attorney who specializes in insurance disputes to evaluate your options and determine the best course of action.

Q: How can I protect my business from similar losses in the future?

Review your current insurance policies to ensure they provide adequate coverage for pandemics, viruses, and government-mandated closures, potentially by adding specific endorsements or purchasing specialized policies.

Q: What if my policy doesn't mention 'physical damage' but still denies my claim?

You should consult an attorney. While this court emphasized 'physical damage,' other policy wordings or legal arguments might exist. The specific language of your contract is crucial.

Q: Are there any exceptions to the 'physical damage' rule for business interruption claims?

Exceptions are rare and depend entirely on the specific wording of the policy. Some policies might have endorsements or clauses that broaden coverage beyond physical damage, but these are not standard.

Q: Has this type of insurance dispute been common since the pandemic?

Yes, there have been numerous lawsuits nationwide filed by businesses seeking business interruption coverage for COVID-19 related losses, with varying outcomes depending on policy language and jurisdiction.

Q: Were there any dissenting opinions in this case?

No, the appellate court's decision was unanimous. All judges agreed that the policy language required physical damage, which was not present.

Q: What was the docket number in Chicago Restaurant Management Group, LLC v. Great American Insurance Co.?

The docket number for Chicago Restaurant Management Group, LLC v. Great American Insurance Co. is 1-23-2353. This identifier is used to track the case through the court system.

Q: Can Chicago Restaurant Management Group, LLC v. Great American Insurance Co. be appealed?

Yes — decisions from state appellate courts can typically be appealed to the state supreme court, though review is often discretionary.

Q: What is the procedural posture of this case?

The case reached the appellate court after the trial court dismissed the plaintiff's claims for breach of contract and bad faith. The appellate court reviewed the trial court's decision.

Q: What was the burden of proof for Chicago Restaurant Management Group?

CRMG had the burden to prove that its losses were covered under the insurance policy. For the breach of contract claim, the standard is a preponderance of the evidence.