Penalty Shot: NHL Sues Its Insurers Over COVID-19 Losses
Twenty out of the 32 National Hockey League teams and the league itself are suing five insurance companies as a result of the COVID-19 pandemic and its impact.
The teams are hoping to recoup an alleged $1 billion worth of losses due to the pandemic. These losses, they say, were in the form of ticket sales, concessions, parking and in-arena merchandise sales.
Due to the pandemic, especially during the 2020 season, teams were forced to play without cheering fans and subsequently without the added revenue stream.
The 2019-20 season was placed on pause in March 2020, finishing out later in the year once the teams were placed in quarantine bubbles.
The 2020-21 season further suffered, the teams allege, due to minimal attendance.
One insurer named in the lawsuit is Factory Mutual.
All 20 teams purchased all-risks policies, which “promise to protect the hockey plaintiffs against loss of revenue and certain expenses if one or more of them cannot use their arenas or other insured properties due to the impact of some external physical peril.”
The NHL teams state that COVID-19 is an external peril that triggered the policy.
However, the insurers have countered that no physical loss has occurred. The virus, it argues, did not cause physical damage to the property or the venues, and therefore would not trigger the policy.
The NHL had a policy with Factory Mutual “in which the company would provide coverage for the financial losses the teams face because of the coronavirus. That would include losses incurred when a communicable disease makes clubs’ arenas unfit for their intended use,” the Toronto Sun reported.
The original suit was filed in June 2021.
In November, Factory Mutual filed a court motion asking a judge to dismiss the NHL’s claim, citing a lack of “physical loss or damage” to the plaintiffs’ property. In December, the NHL teams filed an objection.
Scorecard: No decision is yet in on these claims. Further litigation is likely to follow.
Takeaway: COVID business interruption claims continue to trickle in from both big and small organizations. Insurers should expect this sort of
litigation to be ongoing. &