Madison Sourdough suing insurance company over rejected COVID-19 claim
By: A. J. Bayatpour, Reporter, WKOW 27 | April 23, 2020
MADISON (WKOW) — Madison Sourdough, a popular Williamson Street bakery, has filed a lawsuit in federal court against its property insurer. The bakery claims Society Insurance rejected its claim for damages from lost business due to the COVID-19 pandemic and subsequent “safer at home” order in Wisconsin.
“American businesses are going to be experiencing billions and billions of dollars of losses and these same businesses paid a lot of money to have business interruption insurance,” said Tim Burns, the attorney representing Madison Sourdough in the lawsuit.
According to the federal suit, filed in the Eastern District of Wisconsin, Madison Sourdough claims that “in the special property coverage form, Society Insurance did not exclude or limit coverage for losses from viruses.”
Rebecca Kollman, Corporate Marketing Manager for the Fond du Lac-based insurer said Thursday that the company does not comment on ongoing litigation.
“We look forward to a favorable resolution of this situation in the near future,” Kollman said.
Andy Franken, President of the Wisconsin Insurance Alliance, said it is not reasonable to expect property insurers to cover losses related to COVID-19.
“Under the contracts that are vastly used in the industry, virus protection is excluded,” Franken said. “Premiums were not collected to pay for this type of payout.”
The lawsuit argues that “contamination” is cause for the insurer to pay out a claim; Burn said COVID-19 constitutes contamination as it resulted in the closure or suspension of business.
Madison Sourdough is currently allowing customers to place orders ahead of time and pick them up on Fridays and Saturdays.
“(Insurers are) not behaving in the way they promised to behave, they aren’t behaving in the way they told regulators their policies worked,” Burns said.
Burns said he is combining the lawsuit with several other similar cases in a Chicago federal court. He said his goal is to help create a large class action case involving numerous businesses and their insurers.
Burns said he suspects the end result will be a large single settlement with insurers funding a payout to each of the plaintiff businesses.
“The defendant, in this case, the insurance companies, will eventually come to the point where they agree to put up X amount of money that ensures their survival but still gives a large portion of these claims paid,” Burns said. “And that’s likely what will happen here.”