Friday, January 28, 2022

After claiming $1 billion in losses, the NHL and 20 teams sue insurance companies over COVID-related denials

The NHL and 20 of its teams claimed to have lost over $1 billion over the COVID-19 pandemic, and they’re suing five of their insurance providers for reimbursement. In the claim, which was filed last June in a California Superior Court, the plaintiffs alleged their insurance providers breached contract by not reimbursing the losses they incurred because of a communicable disease. 

While the claim did not provide a specific monetary amount the plaintiffs hope to recoup, the NHL and its teams said they lost more than $1 billion from canceling 189 regular-season games in 2019-20 and barring fans from that season’s playoffs. In 2020-21, the NHL and its teams suffered additional losses from shortening the regular season to 56 games and limiting fan attendance. 

“Fan attendance is a life-blood of the plaintiffs’ revenues,” the NHL’s claim says, per TSN. “A significant source of the plaintiffs’ revenue comes from arena-related activities, such as ticket sales, concessions, parking, and in-arena merchandise sales.” 

The NHL and its teams also claimed to have spent millions on COVID-19 preventative measures such as HVAC systems and touchless entry, and they want the defendants – Factory Mutual Insurance Company, The Cincinnati Insurance Company, Starr Surplus Lines Insurance Company, Lexington Insurance Company and Federal Insurance Company – to foot at least some of the bill. 

Factory Mutual requested a dismissal of the NHL’s claims in a Nov. 12 court motion, citing a lack of “physical loss or damage” to the plaintiffs’ property.  The NHL and its teams fired back on Dec. 16, saying their policies cover revenue lost while a government order restricts access to their property. 

The dispute began shortly after the NHL and its teams allegedly provided loss reports to Factory Mutual on March 13, 2020. Nine days later, according to the NHL, Factory Mutual told the league the “‘presence of COVID-19 at an insured location does not constitute ‘physical damage of the type insured.'” 

This isn’t the only COVID-related legal battle between sports organizations and insurance companies. The NCAA reportedly collected $270 million after the cancellation of March Madness in 2020, and that same year the MLB and its 30 teams filed suit against three insurers over denied claims. 

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