Stonegate's lawyer, Ben Lynch, said the company's 760 insured pubs, bars, and nightclubs had each faced separate challenges, opening and closing at different times according to regional rules - and seeing business drop by up to 90% below projections.
Experts believe that if the Stonegate case is successful, it will give new impetus to a second wave of claims against insurers, which could cost the industry billions of pounds, further damage reputations, and push premiums even higher for businesses and consumers.
Stonegate is suing MS Amlin, Zurich Insurance, and Liberty Mutual, alleging that the pandemic, government-ordered closures, and restrictions triggered business interruption coverage multiple times and will continue until April 2023.
Insurers acknowledge Stonegate's businesses were covered by their policies, but argue that coverage was limited to a single business interruption payment of 2.5 million pounds, which has already been paid, according to court documents.
The insurers paid 14.5 million pounds in total, including 12 million pounds for additional increased costs of working (AICW), and claim their liability is limited to 17.5 million pounds. According to filings, they call the claim "hugely exaggerated."
MS Amlin led the Stonegate policy with a 55% exposure. Each of the other insurers has 22.5 percent.
The case is by far the most significant since the Supreme Court ruled last year that many insurers had wrongfully denied business interruption claims from thousands of small businesses that had to close or limit trading to combat the coronavirus.
So far, policyholders have received nearly £1.35 billion in compensation. However, not all policy wordings were covered, and where they were, some payout levels were disputed.
Other insurers are keeping a close eye on the Stonegate case. When asked if their employer was being sued, a representative from one insurer watching the proceedings told Reuters, "No, not yet."
Corbin & King, the owner of London's Wolseley restaurant, won a similar BI case against insurer Axa in February - though it has since gone into administration following a battle with its largest shareholder.
Greggs' multimillion-pound claims against Zurich and Strada, as well as Coppa Club owner Various Eateries' claims against Allianz, will be heard next month.