Insurers Battle Broadway Theater Owner Over Pandemic Payout – Forbes

25August 2020

Pedestrians strolling outside the Eugene O’Neill Theatre on November 25, 2008(AP Photo/Craig Ruttle)ASSOCIATED PRESS The Broadway theater owner that offered a house to the initial production of Spring Awakening now finds itself the victim of a rude awakening.

According to a brand-new claim, executives at Jujamcyn Theaters were surprised to learn that its insurance provider would not cover most of its losses throughout the COVID-19 pandemic. “Instead of honoring their guarantees, Federal [Insurance Company] flatly denied protection, refusing to pay even a cent to assist Jujamcyn, and Pacific [Indemnity Company] embraced an analysis seriously restricting just how much it would pay Jujamcyn,” grumbled attorneys for the theater owner, which is now seeking damages in New york city federal court.

On March 12, Governor Cuomo purchased all Broadway theaters to close in an effort to stop the spread of the coronavirus. While it had been reported that 2 ushers had checked positive for COVID-19, at least 7 people operating in Jujamcyn homes had contracted the infection, and” [c] ountless people, asymptomatic, pre-symptomatic, or otherwise, existed at Jujamcyn’s theaters prior to March 12, 2020, who may have unconsciously spread out the infection inside the theaters and to numerous others prior to returning to the cities, states, and nations from which they came,” confessed the attorneys.

Jujamcyn, which had formerly welcomed about 48,000 consumers to its theaters weekly, now welcomed none, and the company sent insurance claims to cover its losses.

Its policy with Federal Insurance Company protects business from losses suffered as an outcome of “direct physical loss or damage” to its theaters. There are no specific exclusions for viruses, communicable diseases, or pandemics, and the policy likewise requires the insurance company to pay any losses “incur [red] due to the actual problems of [its] operations, directly brought on by the restriction of access to [its] properties … by a civil authority.”

“Jujamcyn fairly anticipated Federal to pay under its policy for Jujamcyn’s monetary losses,” mentioned its attorneys. The insurance provider “understood, and openly acknowledged, that [it] might be bound to spend for enormous losses in case of a pandemic,” and it “understood that [it] might use commonly offered and typical exclusions to guard against being bound to spend for pandemic-associated losses.”

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But, nevertheless, Jujamcyn’s insurance claim was denied. Federal Insurance Company reacted that its policy just covers losses resulting from”physical loss or damage” to the theaters like a fire or a leakage, and the coronavirus did not cause any physical loss or damage. “Generally,’physical loss or damage'indicates that the physical structure or physical characteristics of the residential or commercial property have been changed by a’covered danger’, “mentioned its representatives, and the”[ l] oss of usage or reduced worth of residential or commercial property that has not been physically changed will not be thought about ‘physical loss or damage.'”

In addition, although the insurance provider acknowledged that Governor Cuomo closed the theaters, it argued that access to them is not in fact prohibited. “Regular check-ins to guarantee all areas are all right have been performed,” its representatives composed.

Jujamcyn firmly insisted that New york city City Mayor Costs de Blasio has described the coronavirus as “triggering residential or commercial property loss and damage,”and it mentioned some California and Oregon lawsuit in which “the contamination of residential or commercial property by a harmful compound has been deemed to constitute residential or commercial property damage.” Federal Insurance Provider “has litigated and lost this issue,”argued its attorneys. The result might be different in New York, where judges tend to need physical damage.

When building scaffolding collapsed on 43rd Street in 1998, and theatergoers might not access the Stephen Sondheim Theatre, its proprietor, the Roundabout Organization, sent an insurance claim to cover its losses for the cancelled performances. The claim was denied, and the Roundabout Organization took legal action against the insurance provider in New york city state court. The appellate court sided with the insurance provider, highlighting that “the language of the service disruption provision in the policy plainly and unambiguously supplies protection just where there is direct physical loss or damage to the insured’s residential or commercial property.”

Last month, when a New York magazine publisher sued its insurance provider after denying its insurance claim for losses due to the COVID-19 pandemic, the judge brought up the old Roundabout case. “What is the damage?” she asked.”I feel bad for every small company that is having problems throughout this period of time,”the judge said.”But, New york city law is clear that this type of service disruption requires some damage to the residential or commercial property,” she mentioned.

The other insurance provider likewise declined to make Jujamcyn entire.

Its policy with Pacific Indemnity Company covers losses that business suffers from the cancellation, disruption, or post ponement of any performance that is “brought on by or arises from a covered event.” The term “covered event” refers to anything beyond Jujamcyn’s control, and the insurance plan restricts the payment for each covered event to $250,000.

When reviewing Jujamcyn’s claim, nevertheless, the insurance provider took the position that the pandemic was a single covered event throughout all five of its theaters. Pacific Indemnity Company did not acknowledge the losses that each theater suffered separately, and it paid Jujamcyn just $250,000.

“Pacific deprived Jujamcyn of the monetary security that it requires to weather the past, present and future situations connected with the spread of SARS-CoV-2 and actions to ‘flatten the curve,’ rebound from its monetary losses, and continue operating,” grumbled the attorneys for the theater owner.Source:

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