HOUSTON THEATER CORONAVIRUS LAWSUIT

SCGM, Inc. which owns and operates Houston area theaters Star Cinema Grill and Hollywood Palms Cinema, has filed a lawsuit against Certain Underwriters at Lloyd’s for denying the existence of coverage for pandemics, such as COVID-19, under their policy.

On March 18, 2020, after emergency orders had been issued by state and local officials to close non-essential businesses, SCGM filed a notice of claim under their Pandemic Event Endorsement, which would provide up to $1 million in coverage for “pandemic events” to pay for any business losses, similar to a business interruption insurance claim.

To put this into context, after the 2014 Ebola crises, insurance carriers began excluding coverage for closures due to Ebola and other diseases and viruses from their standard policies. Lloyd’s, however, saw this as an opportunity to up-sell their standard policies by providing a “Pandemic Event Endorsement” as an add-on coverage at a higher monthly premium.

However, when SCGM sent a notice to Lloyd’s that they would be filing a claim under the pandemic endorsement, Lloyd’s simply said there wasn’t coverage for the COVID-19 pandemic because it wasn’t a “foodborne illness,” but a “respiratory illness.”

After this notice, SCGM filed a lawsuit against Lloyd’s for breach of contract, breach of duty of good faith and fair dealing, and gross negligence in federal court, seeking damages over $1 million along with attorney’s fees.

SCGM’s lynchpin argument is that the endorsement specifically states that a “Covered Disease is limited to the following pathogens, their mutations, and variations…Severe Acute Respiratory Syndrome-associated coronavirus (SARS-CoV).” As we know, COVID-19 is, in fact, a variation of SARS-CoV, called SARS-CoV-2, both of which are respiratory illnesses and not foodborne illnesses.

Coronavirus Business Interruption Claims Will Be Denied

As is par for the course for many insurance carriers, we can expect that a large number of businesses that file business interruption claims will be denied.

Some denials will be with cause as some insurance carriers began excluding coverage for pandemic’s specifically after 2014, however, even if businesses have coverage through an endorsement or through clauses in their standard policies, they will still be denied out of bad faith.

Insurance carriers, through misrepresenting coverage or adjusting claims in bad faith, are designed to ensure that they pay out as little possible, even if it means illegally denying legitimate claims.

My Business Interruption Claim Was Denied. What Do I Do?

DON’T PANIC. There’s still an opportunity to have your claim paid. Speak to an experienced business interruption claim lawyer immediately to help review your policy and help determine what the best path is for you to resolve your claim.

In the above example, it’s clear as day that Lloyd’s blatantly adjusted SCGM’s claim in bad faith, and unfortunately, cases like these happen all of the time.

Having an attorney review your claim is a sure-fire way to ensure that your claim has the best possible chance to be paid out fairly.

Call The Texas Coronavirus Business Interruption Claim Lawyers At Moore Law Firm

If your Texas business interruption claim was denied, call the Texas business interruption claim lawyers at Moore Law Firm today for a free case evaluation.