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In-N-Out-closes-dining-rooms.jpg Nancy Luna

 In-N-Out Burger sues Zurich American Insurance over denial of COVID-19 claim

The iconic Southern California quick-service chain joins the fray of restaurants seeking insurance coverage for business losses tied to the pandemic.

First, Thomas Keller. Now In-N-Out Burger.

The two iconic industry brands — one a fine dining celebrity chef, the other a fast food burger institution — are both suing their insurance companies for rejecting their COVID-19 claims. Keller sued his insurance company in late March. On May 29, Irvine, Calif.-based In-N-Out filed its own lawsuit, claiming its insurer, Zurich American Insurance Company, is in breach of contract for denying the chain’s claim for business interruption losses tied to the coronavirus pandemic.

In the lawsuit, In-N-Out said it has an “all risk” policy with Zurich, which covers “not only more commonly known risks like fire, but also entirely unknown and novel risks that may arise which were not previously considered by the company, Zurich or by the public at large.”

The policy had “no exclusion for viruses or infectious diseases,” according to the suit.

Like other restaurants across the U.S., In-N-Out was forced to close dining rooms when stay-at-home orders swept the nation.

“In-N-Out has suffered and continues to suffer significant losses from the closures of its dining rooms and related losses from the COVID-19 pandemic,” the company stated in the suit.

The company did not disclose the amount of losses incurred during the crisis.

The policy, which is capped at $250 million, also covers loss of gross earnings in the event of an “order of civil or military authority that prohibits access to the location,” the suit said.

That provision should trigger coverage since government officials were mandating the closure of dine-in service to stop the spread of the virus, In-N-Out claims in the suit.

On May 29, Zurich informed In-N-Out by phone that it would be receiving a letter denying its claim.

“Zurich took the position that the policy excludes loss relating to [the] virus despite the plain policy language to the contrary,” the suit said.

Insurance coverage has been one of many pain points for restaurant owners during the pandemic.  

Chef Keller’s lawsuit requests that the court make a legally binding decision on whether his policy with Hartford Fire Insurance Company allows him to recover business losses incurred in connection with the viral outbreak. Keller’s business interruption claim was denied because Hartford said there were no dangerous conditions at the chef’s restaurants.

NRN’s estimated fiscal 2019 U.S. sales for In-N-Out is $979.6 million, up 7.1% from an estimated $914.3 million in 2018. The chain ended 2019 with a reported 351 locations, up 3.8%, from 2018's reported year-end restaurant count of 338.

In-N-Out is slated to open its first three restaurants in Colorado this year. Restaurants are under construction in Colorado Springs, Aurora, and Lone Tree.

For our most up-to-date coverage, visit the coronavirus homepage.

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Contact Nancy Luna at [email protected] 

Follow her on Twitter: @fastfoodmaven

Senior Editor Alan Liddle contributed to this report.

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