Iowa Restaurant Owner Says Insurers Denied COVID-19 Claim in Bad Faith

DES MOINES, Iowa — The owner of a group of Iowa restaurants has sued its insurers in federal court, arguing that business interruption losses arising from COVID-19 civil authority orders caused the eateries to sustain “direct physical loss” to insured property, triggering coverage under the policies.

Gerleman Management Inc. originally filed the complaint against Donegal Insurance Group, Le Mars Insurance Co., and Atlantic States Insurance Co. in the Polk County (Iowa) District Court. The insurers removed the action to the U.S. District Court for the District of Iowa on June 11.

Gerleman manages various restaurants primarily located in Des Moines, …