EDWARDSVILLE – An Edwardsville hair salon with "communicable disease" coverage is suing its insurance carrier after the insurer allegedly denied a claim for income loss and expenses as a result of the COVID-19 pandemic.
Treo Salon Inc. filed a complaint Oct. 2 in the Madison County Circuit Court against West Bend Mutual Insurance Company, alleging breach of contract. The salon is represented by Ted Gianaris and G. Michael Stewart of Simmons Hanly Conroy in Alton.
According to the complaint, Treo is a hair salon located in Edwardsville. Treo alleges in its complaint that it "maintained and paid" premiums for a policy held by West Bend Mutual which included "communicable disease business income and extra expense coverage."
Treo claims that beginning in March, it began experiencing substantial losses as a result of governmental orders requiring non-essential businesses to cease operations as a result of the COVID-19 pandemic, which is a communicable disease. The salon filed a claim on the policy on March 21, seeking coverage for losses.
"Despite such coverage, defendant has refused to honor its policy commitments to its insureds, resulting in substantial losses to plaintiff and other similarly situated insureds," the suit states. "In the absence of timely action by this court, plaintiff and other similarly situated insureds risk losing their businesses altogether."
Treo alleges that its claim was denied by West Bend Mutual on April 23.
Treo claims West Bend Mutual argued in its denial that "shut down is not based on order by governmental entity with jurisdiction over insured's operations based on an outbreak of a communicable disease at the insured's premises. Your policy requires that a closure must be ordered by a local, state, or federal board of health or similar governmental board, and that the closure is due to an outbreak of the insured premise for coverage to be triggered."
The plaintiff argues that the denial is "in contrary to the facts of COVID-19" and the salon's policy because Gov. J.B. Pritzker's executive orders caused the closure of the business.
Treo also claims its policy includes "loss or damage caused by or resulting from...virus or bacteria" and that West Bend has breached the insurance contract.
"Upon information and belief, Plaintiff is one of hundreds to thousands (or more) Illinois businesses with Communicable Disease coverage from Defendant that Defendant is refusing to pay," the suit states.
The salon also seeks class certification in the complaint.
Treo seeks declaratory judgment finding that the insurance policy covers losses as a result of the shutdown and that the plaintiffs are entitled to coverage. The plaintiff also seeks compensatory damages, court costs and all other relief deemed just and proper.
Madison County Circuit Court case number 20-L-001399