While businesses are struggling to stay afloat, some are taking their fight to get funds to court.
WISH-TV’s I-Team 8 spoke with representatives for two central Indiana businesses suing insurance companies because they say their policies should cover losses from having to close during the coronavirus pandemic.
The Indiana Repertory Theatre is taking a dramatic pause. Though the last several weeks seem like a scene from a play, the pandemic’s effect on entertainment is all too real: The IRT canceled its entire season.
“They had to lay off staff, they had to cut budgets across the board, they had the close the theater, they’ve got to return ticket money for refunds,” said George Plews, the attorney representing the IRT in this case. “They had to sustain losses. We’re still counting them, but it looks like it is a loss of between $500,000 and a million dollars or more.”
The IRT’s lawsuit claims the policy does not exempt virus coverage, so IRT believes it is entitled to business income during a period when its ordinary operations are suspended. The theater’s insurer, Cincinnati Casualty Company, denied the theater’s claim.
Plews said the insurance company’s primary argument is that there has to be an actual physical impact on the property, and that the policy is not intended to cover things that do not have a physical impact on the property. However, Plews said, CCC did have the option of putting a virus exclusion in IRT’s policy — a form he says has been available to insurers since about 2006. But, according to Plews, IRT’s policy does not contain a virus exclusion.
“It was pretty clear, pretty quickly, that it wasn’t going to get paid,” said Plews. “In fact, in some cases, insurers have been issuing denials within a couple of days after getting the claim.”
The owner of MHG Hotels in central Indiana is facing the same fight with his insurer.
“This insurance company needs to step up and do the right thing,” said Sanjay Patel, CEO of MHG Hotels. “This is what people pay for.”
Patel told I-Team 8 his hotels’ occupancy went from 65-70% down to the single digits. He wants to keep employees at his 13 Indiana hotels on the payroll and thinks his insurance policy should cover this. He said a PPP loan from the federal government won’t be enough to retain all employees until business rebounds. He feels his insurance claim was denied out of hand.
“It’s unfortunate that we have to do this,” Patel said of the legal action he is taking. “This is something that we paid for for years, and we have never claimed a business interruption before and the insurance company just needs to do the right thing.”
When I-Team 8 reached out to IRT’s insurer, Cincinnati Casualty Company, and MHG Hotels’ insurer, EMC Insurance, both said they couldn’t comment on pending litigation.
The Insurance Information Institute says coronavirus is not covered under a typical business interruption plan, according to its website.
Plews said small business owners should take a hard look at their policies and see if they might be eligible for the same kind of compensation the IRT is seeking.
By the end of May, the Indiana Department of Insurance had received eight complaints about insurers not covering COVID-19 losses by the end of May.
IRT is opening its 2020-2021 season November with “A Christmas Carol” with special safety procedures for audiences.