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Restaurant owners who are not entitled to fire coverage



A federal appeals court has upheld a lower court ruling in favor of a Markel Corp. unit, claiming that restaurant owners were not entitled to coverage for a fire in their Seattle restaurant because of false statements they had made in their policy application . 19659002] Markel Corp. unit United Specialty Insurance Co. issued a policy covering Michelle and Scott Simpson's family business, Roosevelt Ale House, following Wednesday's decision by the 9th U.S. Circuit Court of Appeals in United Specialty Insurance Co. v. Shot Shakers Inc .; Scott Simpson; Michelle Simpson.

The policy included a "concealed, misrepresentation or fraud" condition that invalidated coverage in all cases of fraud involving coverage, covered property, interest in the covered property or a claim, according to the decision

Following a fire in the restaurant denied United Special coverage based on this policy condition.

The restaurant and Simpsons sued the U.S. District Court in Seattle, which ruled in favor of the insurer and was upheld by a unanimous panel of three judges.

In their insurance application, the Simpsons had represented that their fire extinguishing system covered all cooking surfaces and fryers and that their hoods, ducts and filters were cleaned at least every six months or more often.

"However, the appellants were aware that these statements were false," says the 9th District Court. "Their hoods, ducts and filters were cleaned not least every six months, and their systems did not protect all cooking areas and fryers," it said.

United Specialty also denied coverage under a "protective measures" policy that required insured persons to maintain an automatic sprinkler system and fire alarm in accordance with a defined schedule.

This in turn required a fully functioning fire extinguishing system over the entire cooking area with an automatic shutdown, according to the ruling. [1

9659002] "The appellant failed to raise a substantive issue regarding denial of coverage under this exemption, as the fire-fighting system did not cover the broiler that was the source of the fire," the decision said.

"In addition, the complainant was well informed through inspection reports to make the necessary adjustments to the fire-fighting system," the decision states, confirming the lower court's decision.

Lawyers in the case did not respond to a request for comment.

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