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Law360 (April 2, 2021, 8:51 PM EDT ) A Marriott hotel owner hit its insurance broker with a federal suit in South Carolina on Friday, alleging that the broker's malpractice cost it $1 million in communicable disease coverage for pandemic-related losses.
Provost Associates LLC, which negotiated the insurance for the Marriott hotel in Spartanburg, S.C., also did not give notice to FM Global of the hotel's claim for business interruption losses, according to the suit. That Marriott hotel closed its doors under government orders to stop the spread of the coronavirus.
The Spartanburg Marriott owner alleged that Provost and its agents, Robert J. Provost and Jason Provost, left the hotel with considerably less coverage in 2020 than in 2019. Provost did not accurately communicate the availability of relevant coverage for events like the pandemic, according to the suit.
"Provost concealed the fact that they had failed to obtain an appropriate policy and chose not to tell Spartanburg Marriott that its critical coverages had changed," the hotel's owner said.
SMR Hospitality III LLC filed suit in the District of South Carolina, saying it relied on Provost's expertise in obtaining the best coverage for its hotel. When faced with pandemic-related losses, the owner said, it found itself with $1 million less in communicable disease coverage at a higher premium cost.
"Provost's sales presentation did not include a disclosure that Spartanburg Marriott was not covered for indemnity at least as good as that provided by the replaced policy," the owner said. "Provost knew that Spartanburg Marriott was suffering greatly from the COVID-19 pandemic and would need to use any related coverage."
The owner brought claims for negligence and violation of South Carolina's Unfair Trade Practices Act.
This past month, two insurance brokers escaped suits against them over pandemic coverage. A California federal judge ruled one broker had no duty to warn a hair salon of unforeseen risks such as the pandemic. A West Virginia judge ruled that another broker had not misrepresented the policy to a bridal shop.
Representatives for the Spartanburg Marriott's owner did not respond to requests for comment.
The Spartanburg Marriott owner is represented by T. Ryan Langley and Charles J. Hodge of Hodge & Langley Law Firm.
Counsel information for Provost was unavailable.
The case is SMR Hospitality III LLC v. Robert J. Provost et al., case number 7:21-cv-00980, in the U.S. District Court for the District of South Carolina.
--Additional reporting by Daphne Zhang. Editing by Peter Rozovsky.
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