Theater Operator Sues Insurers That Denied It Coronavirus Payments
Jujamcyn Theaters, the operator of five Broadway houses, has sued its insurers for denying it millions of dollars that the theater company says it deserves as payment for the losses suffered during the monthslong coronavirus pandemic shutdown.The theater company said that one of the insurance companies, Federal Insurance Company, denied it “even a penny” of pandemic-related coverage, while the other company, Pacific Indemnity Company, paid it a fraction of what the Broadway operator believes it should be paid.The lawsuit, filed in the U.S. District Court for the Southern District of New York on Tuesday, is the latest challenge to the insurance industry’s refusal of coverage for the deluge of business losses experienced during the pandemic.After Gov. Andrew M. Cuomo of New York shut down theaters in March and then closed all nonessential businesses, arts institutions of all kinds filed insurance claims for business income loss. But the insurance industry has issued a torrent of denials, arguing that its policies never promised this kind of coverage in the first place and that fulfilling all of these requests would bankrupt the industry.On March 12, when Mr. Cuomo ordered an end to all gatherings of more than 500 people — effectively shuttering all 41 Broadway theaters — Jujamcyn was forced to cancel the hit musical “Hadestown” at the Walter Kerr Theater, as well as four other shows, including “The Book of Mormon” and “Frozen.”The theater company submitted its business income loss claim to Federal Insurance, but the insurer denied coverage, saying that there was no “direct physical loss or damage,” which is needed to trigger payments. Such policies are designed to replace lost income in cases of building damage or when a civil authority has shut down the surrounding area. In its lawsuit, Jujamcyn argues that the coronavirus pandemic does cause physical loss or damage, explaining that the virus can adhere to surfaces for days and linger in the air inside buildings for hours.In a July letter to the insurer’s parent company, Chubb, Jujamcyn’s lawyer requested that the insurer withdraw its denial, writing that its theaters might not generate box office revenue for the rest of the year and that its business income losses may exceed $29 million.“Chubb has seized upon excuses to abandon its insured in its time of need,” the lawyer, Jeffrey L. Schulman, wrote.Chubb, which is also the parent company of Pacific Indemnity, is a common insurer of arts organizations. Weeks into the pandemic, the company’s chief executive, Evan Greenberg, caused a stir among clients when he said in an earnings call that business interruption insurance “doesn’t cover Covid-19” and that “the industry will fight this tooth and nail.”The Coronavirus Outbreak ›Frequently Asked QuestionsUpdated August 27, 2020What should I consider when choosing a mask?There are a few basic things to consider. Does it have at least two layers? Good. If you hold it up to the light, can you see through it? Bad. Can you blow a candle out through your mask? Bad. Do you feel mostly OK wearing it for hours at a time? Good. The most important thing, after finding a mask that fits well without gapping, is to find a mask that you will wear. Spend some time picking out your mask, and find something that works with your personal style. You should be wearing it whenever you’re out in public for the foreseeable future. Read more: What’s the Best Material for a Mask?What are the symptoms of coronavirus?In the beginning, the coronavirus seemed like it was primarily a respiratory illness — many patients had fever and chills, were weak and tired, and coughed a lot, though some people don’t show many symptoms at all. Those who seemed sickest had pneumonia or acute respiratory distress syndrome and received supplemental oxygen. By now, doctors have identified many more symptoms and syndromes. In April, the C.D.C. added to the list of early signs sore throat, fever, chills and muscle aches. Gastrointestinal upset, such as diarrhea and nausea, has also been observed. Another telltale sign of infection may be a sudden, profound diminution of one’s sense of smell and taste. Teenagers and young adults in some cases have developed painful red and purple lesions on their fingers and toes — nicknamed “Covid toe” — but few other serious symptoms.Why does standing six feet away from others help?The coronavirus spreads primarily through droplets from your mouth and nose, especially when you cough or sneeze. The C.D.C., one of the organizations using that measure, bases its recommendation of six feet on the idea that most large droplets that people expel when they cough or sneeze will fall to the ground within six feet. But six feet has never been a magic number that guarantees complete protection. Sneezes, for instance, can launch droplets a lot farther than six feet, according to a recent study. It’s a rule of thumb: You should be safest standing six feet apart outside, especially when it’s windy. But keep a mask on at all times, even when you think you’re far enough apart.I have antibodies. Am I now immune?As of right now, that seems likely, for at least several months. There have been frightening accounts of people suffering what seems to be a second bout of Covid-19. But experts say these patients may have a drawn-out course of infection, with the virus taking a slow toll weeks to months after initial exposure. People infected with the coronavirus typically produce immune molecules called antibodies, which are protective proteins made in response to an infection. These antibodies may last in the body only two to three months, which may seem worrisome, but that’s perfectly normal after an acute infection subsides, said Dr. Michael Mina, an immunologist at Harvard University. It may be possible to get the coronavirus again, but it’s highly unlikely that it would be possible in a short window of time from initial infection or make people sicker the second time.I’m a small-business owner. Can I get relief?The stimulus bills enacted in March offer help for the millions of American small businesses. Those eligible for aid are businesses and nonprofit organizations with fewer than 500 workers, including sole proprietorships, independent contractors and freelancers. Some larger companies in some industries are also eligible. The help being offered, which is being managed by the Small Business Administration, includes the Paycheck Protection Program and the Economic Injury Disaster Loan program. But lots of folks have not yet seen payouts. Even those who have received help are confused: The rules are draconian, and some are stuck sitting on money they don’t know how to use. Many small-business owners are getting less than they expected or not hearing anything at all.What are my rights if I am worried about going back to work?In a statement responding to Jujamcyn’s lawsuit, Chubb said that it had paid out millions of dollars this year for the pandemic-related disruption of Broadway performances but that most standard property insurance policies do not cover pandemic risk when it comes to business interruption.“Creating false expectations about coverage that does not exist, including filing baseless lawsuits, will not solve this crisis,” it said.Jujamcyn said in its lawsuit that it should also be granted insurance payments based on the fact that state and local government had shut its theaters down. The state’s phased reopening does not yet include indoor theaters.According to the lawsuit, which accuses both Federal Insurance and Pacific Indemnity of a breach of contract, part of the reason that Jujamcyn’s business income insurance claim was denied was because the governmental orders did not prohibit access to the theaters, meaning theater employees were not barred from entering and checking on the buildings. Mr. Schulman called that a “ludicrous position.”The second part of the lawsuit argues that Pacific Indemnity, which provides Jujamcyn with performance disruption coverage, was wrong in its decision to only grant the theater company one payment of $250,000 for its five theaters. The insurance company said that the pandemic qualified as a single “occurrence,” requiring only one performance disruption payout. Jujamcyn countered that the insurer was suffering from a “serious case of seller’s remorse” and actually owed it more than $1 million.