A popular bar in Nashville, Beer Sellar, has taken legal action against its insurer, United States Liability Insurance Co., following a devastating explosion that occurred in 2020. The bar’s lawsuit claims that it may take years of litigation to determine if coverage is due under the amended exclusions in its insurance policy. Initially filed in state court, the case was recently transferred to federal court. Beer Sellar alleges that the insurer breached its contract by failing to fully compensate for property damage and business interruption losses, particularly by not providing lost-business income payments since June 2021. The bar, known for its vibrant nightlife, had been operating for over 20 years and had invested significantly in property renovations.
The complaint further accuses U.S. Liability of engaging in deceptive tactics to delay legal action beyond the two-year statute of limitations in Tennessee. To counter this, Beer Sellar argues that the insurance contract was signed at its home offices in South Carolina, which has a three-year statute of limitations. Additionally, the insurance company allegedly failed to provide a 30-day notice regarding the impending Tennessee limitations deadline.
The insurance policy in question excludes coverage for certified acts of terrorism. However, an endorsement on the policy appears to override this exclusion, stating that it does not apply to loss or damage caused directly or indirectly by “certified acts of terrorism” under the provisions of the federal Terrorism Risk Insurance Program Reauthorization Act of 2015. Beer Sellar purchased terrorism coverage for an additional $900 premium.
In March 2021, the FBI released a report stating that the deceased suspect behind the bombing was driven by conspiracy theories but that his actions were not terrorism-related. Beer Sellar’s complaint argues that despite the FBI report, the explosion should be considered an act of terrorism and fully covered by insurance.
Determining coverage for acts of terrorism has been complex, with the definition and certification process causing frustration for some business owners. The Insurance Services Office provides 38 terrorism-related endorsements, and an act must be certified by multiple authorities and cause extensive damage to qualify as terrorism. The Nashville bombing’s estimated damages fall below the threshold set by the federal Terrorism Risk Insurance Program Reauthorization Act, which has been raised to $200 million in recent years.