Art institutions, from theaters to concert venues to museums, have filed insurance claims for financial losses related to Covid-19 and have been denied coverage. After pointing to obscure language from hundred-page policies to justify issuing widespread denials, insurance companies are now facing lawsuits and legislative efforts that intend to force them to make payments.
Policy-holders covered in cases of “direct physical loss or damage”—most often applicable in the case of natural disasters such as hurricanes or wildfires—are dealing with intense resistance from insurers that argue their plans were never intended to encompass losses from viruses or bacteria. “I can see a tidal wave of these lawsuits coming, and insurance companies are going to fight like hell,” Kevin Sullivan, a client executive at National Trust Insurance Services, told the New York Times.
The Dance Theater of Harlem filed a claim after New York’s shutdown of nonessential businesses on Sunday, March 22. The venue argued that without afterschool classes, tours, fundraising galas, and ticket sales from other events, the company’s revenue stream will be seriously impacted. The Brooklyn-based experimental performance space Jack similarly reported losses to its insurance company, as did the Arizona Fox Tucson Theater. Despite having coverage for business interruption—intended to cover lost income in cases of building damage or when surrounding areas have been shut down by a civil authority—both organizations’ claims were denied.
“When we submitted our payments to them, we believed we were being protected,” Anna Glass, executive director of the Dance Theater of Harlem, told the New York Times. “It was disheartening to realize that we weren’t.” The Dance Theater of Harlem believes it is eligible for up to $30,000 for losses after it cancelled performances and its annual gala.
Carnegie Hall also filed a business interruption claim, and cinemas are filing similar claims, but a spokesperson for the National Association of Theater Owners said that they have not yet received payments. The Metropolitan Opera, which already lost $60 million because of the virus and furloughed forty-one staffers on Tuesday, reported that it does not have such coverage in its “prohibitively expensive” policy.
According to Damon N. Vocke, a lawyer who represents insurance companies, insurers are unlikely to pay out easily. “This is not something that ought to be foisted upon a private sector industry that never agreed to cover this. It would bankrupt the industry.” Initial payouts for Broadway production houses, for example, could be more than $1 million, projected Peter Shoemaker, a director at the insurance brokerage company DeWitt Stern.
Though some—such as a group of celebrity chefs including Wolfgang Puck and Thomas Keller—are legally challenging their insurers, others are advocating for legislation that will make it easier for small businesses and nonprofits to receive payouts in the case of the pandemic. In late March, New York State assemblyman Robert C. Carroll introduced a bill that would push for broadened business interruption insurance to ensure reimbursements for losses from the Covid-19 outbreak.
“If we don’t do something for these small businesses and these theater companies, we’re going to lose them all,” said Carroll. Politicians in neighboring states including New Jersey and Pennsylvania have introduced similar legislation.ALL IMAGES