In a complaint filed in Marion County Superior Court on Friday, Indiana Repertory Theater Inc. said the Cincinnati Casualty Co. told it in a letter March 23 that a closure as the result of the novel coronavirus does not constitute a physical loss that would trigger the policy.
The theater, which had to cancel the rest of its season, claims that the "all risks" insurance is broad, applies to business loss as a result of a forced closure and includes no exclusions that would apply to the virus.
"If Cincinnati had intended to exclude coverage for loss due to a virus it could have included a virus exclusion," the theater said. "Such an exclusion was available to Cincinnati when it created the form it sold to the IRT. Cincinnati included no such exclusion."
The theater alleges in the complaint that the definition Cincinnati used for physical loss — that it only includes physical effects on the property — appears nowhere in the policy, and the complete loss of use of the building that the theater has suffered fits the term as described in the policy.
"The required closure forced us to lay off, furlough or enact pay reductions for over 100 full- and part-time staff, as well as actors, directors and designers," Suzanne Sweeney, managing director of the theater, said in a press release. "It wiped out our entire spring season. This is why we bought insurance — to protect the theater and our talented staff in emergencies."
According to the complaint, the theater employs 65 full-time employees, including both year-round and seasonal, and puts on performances between September and May. The theater announced it was shutting its doors on March 16, the same day the county prohibited public gatherings of 50 people or more in order to stem the spread of COVID-19.
"Hoosiers need to look closely at their insurance policies to see if there is coverage that can help them weather this time," Peter Racher of Plews Shadley Racher & Braun LLP, who represents the theater and serves as one of its board members, said in a press release. "Policies vary widely, and even exclusions may not bar coverage under Indiana law, which is among the best in the nation for policyholders facing unexpected losses."
George Plews of Plews Shadley, also representing the theater, said he's looking forward to helping the theater, which he called a fixture in Indianapolis' cultural community. He said the theater estimates it will lose $1 million or more as a result of the shutdown.
While Cincinnati has not technically denied coverage yet, Plews said that based on their initial response, it doesn't look like they intend to cover the loss.
"This after all is an all-risk policy, so it's supposed to protect you unless it's specifically excluded," he said. "There's no virus exclusion here."
He added that his firm recently won a similar case in which a homeowner sued Allstate Insurance Co. because it refused to cover a brown recluse spider infestation that made the house uninhabitable. In that case, Plews said, he argued that the loss of capacity to use the property constituted a "physical loss" under the policy, and won summary judgment before the insurer settled.
The theater joins numerous other businesses fighting with their insurance carriers over coverage related to the COVID-19 pandemic, including a Florida sports bar, a scuba shop in the Florida keys and a group of Texas movie theaters.
A spokesperson for Cincinnati Casualty declined to comment.
The theater is represented by George Plews, Peter M. Racher, Gregory M. Gotwald and Ryan T. Leagre of Plews Shadley Racher & Braun LLP.
Counsel information for Cincinnati Casualty was not available.
The case is Indiana Repertory Theater Inc. v. The Cincinnati Casualty Co., case number 49D01-2004-PL-013137, in the Marion County Superior Court.
--Editing by Alanna Weissman.
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