Lakers file virus-related BI suit against Chubb

The Los Angeles Lakers basketball team filed a COVID-19 business interruption lawsuit against a Chubb Ltd. unit Monday, stating the virus had caused physical loss and damage to its properties, and criticizing the insurer for reaping billions in profit while denying its claim.

The Los Angeles Lakers Inc. said it had paid $145,052 in premiums for an all-risk policy issued by Chubb unit Federal Insurance Co. that provided $89.4 million in coverage, including $47.6 million for business interruption, according to the lawsuit in The Los Angeles Lakers Inc. vs. Federal Insurance Co.

The coverage did not include a virus exclusion, according to the lawsuit, which was filed in U.S. District Court for the Central District of California.

The litigation follows a lawsuit filed by the Sacramento Kings basketball team last week.

“The coronavirus was physically present at the Staples Center and surrounding properties and caused physical loss and damage to those properties by physically altering their condition, such that extensive physical alterations and new protocols for disinfection and infectious disease prevention were necessary to make the arena fit for occupancy and not create a safe environment for fans to attend,” the complaint said.

It said it has “suffered tens of millions of dollars in lost revenue from ticket sales, media rights, sponsorships, and other sources of revenue.”

The lawsuit states that Chubb, which posted quarterly gross income from premiums of more than $10.2 billion, with profits of more than $2.4 billion six weeks ago, “curtly dismissed the Lakers’ claim with a form letter and without conducting any investigation into the facts. 

“Worse yet, it has refused to pay its customers as a matter of policy on the orders of its CEO, instead pushing the false narrative that losses from COVID are somehow not covered claims. The lawsuit is compelled by that callous and legally untenable expenses.”

Chubb chairman and CEO Evan Greenberg said during an earnings call in July that “Coverage for pandemic was never contemplated in standard business interruption policies, and therefore no premiums were ever charged for those risks.”

The lawsuit seeks a declaratory judgment and charges Chubb with breach of contract, breach of the implied covenant of good faith and fair dealing and seeks damages and costs.

A Chubb spokesman said in a statement, “As a matter of policy, we do not comment on legal matters.”