One of the pre-eminent human rights organizations in the country has sued property and casualty insurance giant Chubb Ltd. for business interruption coverage.
The Simon Wiesenthal Center, a Los Angeles-based nonprofit devoted to confronting issues of racism and anti-Semitism, says it is entitled to coverage due to the March 19 stay-at-home order given by Los Angeles Mayor Eric Garcetti. That order has forced the organization to furlough and lay off staff as well as cancel fundraising events, Reuters reports. Those events included a dinner to be given in honor of George and Amal Clooney and a screening of the documentary "Never Stop Dreaming: The Life and Legacy of Shimon Peres."
The suit, filed in the Central District of California, claims the center is owed coverage by Chubb because its policy covers "physical" property loss and damage. "The coronavirus … clearly has a material existence and is something that exists in nature that physically damages tangible property by rendering it unusable as it adheres to surfaces creating a dangerous property condition," the complaint asserts.
The suit also alleges that the pollution exclusion in the Chubb policy makes reference to several "pollutants" such as smoke and chemicals, but does not include a virus or pandemic exclusion. The complaint goes on to state that when Chubb "chose not to include a specific exclusion for pandemic or virus, it was not an accident or the result of negligent drafting, because they knew a policyholder would not equate a virus or pandemic to a pollutant. Defendant would then be able to expand the exclusionary provision beyond the reasonable non-profit human rights insureds' expectations in the event of extreme losses such as a global pandemic, all while collecting premiums."
Earlier in April, Chubb CEO Evan Greenberg gave several statements in which he warned about the impact of COVID-19 on the insurance business. In an interview with Bloomberg, Greenberg said that forcing insurers to pay for business interruption losses not covered by policies "would do great damage. It would bankrupt the industry." He also said on an earnings call that the virus would have a "meaningful impact" on revenue and profit in the second quarter.
The Simon Wiesenthal Center is being represented by John Houghtaling of Gauthier, Houghtaling LLP in New Orleans. He also represents several restaurants that have sued their insurers over income loss claims related to COVID-19. Chubb has declined to comment on the suit.
Richard Binder
Richard Binder, based in New York, is part of the social media team at ALM. He is also a 2014 recipient of the ASPBE Award for Excellence in the Humorous/Fun Department.