INDIANAPOLIS, Ind. — The Indiana Repertory Theatre is suing their insurance company for refusing to cover a “business interruption” claim tied to the coronavirus crisis.
“For 22 years the IRT has procured as part of its property coverage what’s called business income loss and extra expense coverage. That coverage should apply whenever there’s a forced suspension of normal business operations resulting in a loss,” Plews Shadley & Braun partner Peter Racher said.
The lawsuit filed against the Cincinnati Casualty Company, claims the insurer should cover the Indiana Repertory Theatre’s losses and pay the amounts owed under the policy.
“They say unless there has been damage done to the structure like a tree has fallen on it, then the business income land extra expense coverage is now triggered,” Racher said.
Racher is representing IRT. He said the theatre expects to lose anywhere between $500,000 to $1,000,000 after being forced to close.
“The law in Indiana has been clear that if there’s a reasonable ambiguity in the policy then a court is required to construed that ambiguity in favor of coverage,” Racher explained.
Butler University professor and Director of the Davey Risk Management & Insurance Program Zachary Finn said it’s all going to come down to the fine print.
“One of things insurance companies did over the last few years with SARS and MERS is issue this kind of exclusion for virus and bacteria,” Finn explained.
Which means a lot of policies don’t cover virus outbreaks. Finn said business owners looking at IRT’s situation should go back over their policy, but odds are they’re not insured.
“It would be too expensive to buy and a lot of cases it’s too expensive to buy for big companies to purchase it,” Finn said.
He said some large corporations probably have insurance to cover them during the COVID-19 pandemic.
“When you get to be as large as Eli Lilly you actually get the option to make your own insurance,” Finn said.
We reached out to the Cincinnati Casualty Company about the lawsuit and they’ve chosen not to comment at this time.
Finn hopes insurance companies find a way to help businesses recover because he thinks the economy depends on them.
“Insurance companies have to think about these losses. How much are they going to paying in litigation? Would it be cheaper and in the best interest of the country to go ahead and kick in some money?” Finn added.
4 of Finn’s students have created a model known as the Pandemic Risk Insurance Act to help in the future.
This model is now in the hands of lawmakers in D.C. and Finn is actively talking with them on how to get this signed into law.