In the News
Major League Baseball Sues Over COVID Coverage Denials

• Timothy Darragh
• January 2021
• 

Major League Baseball and its 30 teams have filed suit against three insurers that denied claims for billions of dollars in COVID-19-related losses stemming from lost ticket sales, corporate sponsorships, merchandise sales, special events and advertising revenues.

MLB Commissioner Rob Manfred's office, the ball clubs and MLB affiliates in October filed the suit in California Superior Court in Alameda County against AIG Specialty Insurance Co., Factory Mutual Insurance Co. and Interstate Fire & Casualty Co.

The complaint said the plaintiffs purchased “top-shelf all risks” policies, with Factory Mutual covering 60% of the insurers' total limits of liability, AIG covering 30%, and Interstate covering 10%.

The policies cover up to $1.6 billion in losses for any one occurrence, “and potentially much more for losses involving multiple occurrences,” it said. The insurers refused to cover any of the claims as of the filing of the lawsuit, it said.

The plaintiffs argued they suffered direct physical loss caused by the presence of the virus at each of the stadiums, and each incurred significant expenses in disinfecting their facilities. None of the policy exclusions preclude coverage for losses or damage due to communicable disease, the lawsuit said.

In addition, the insurers specifically chose not to include virus exclusion language that had been developed by the Insurance Services Office, it said. Instead, the policies' contamination exclusion refers to “virus” and to a “disease-causing or illness-causing agent,” but not to communicable disease, which is “expressly covered,” it said.

“FM Global values the long-term relationships we have with our policyholders, and we are proud in leading the industry for claims service,” said Steven Zenofsky, assistant vice president, public relations, FM Global. “It is unfortunate when legal matters arise, because we strongly believe our insurance policies are clear on the coverage provided.”

Allianz, the parent company of Interstate Fire & Casualty, had no comment. Attempts to reach AIG were not immediately successful.

The threat of the virus caused Major League Baseball to play only 37% of games scheduled for the 2020 season, with virtually no fans in the stands, the suit said.