Insurer says pandemic suit ‘ baseless’

Operator of Heinz History Center sues after firm rejects insurance claim

The operator of the Senator John Heinz History Center has sued its insurance company for losses the company says it has suffered because of decreased business from COVID- 19.

The Historical Society of Western Pennsylvania filed suit Monday in U. S. District Court against Federal Insurance Co. of Indianapolis.

The historical society said it filed a claim for business loss and business interruption but the insurance company rejected the claim on the grounds that the history center did not suffer physical damage to its property, among other reasons.

The dollar loss is not specified in the suit but the historical society said its losses have been greater than $ 150,000.

The plaintiff said many employees were let go or furloughed because of the virus shutdown mandated by the governor in March.

The history center’s losses began March 13, the lawsuit said, when the pandemic made it unsafe to continue operating. The state shut down nonessential businesses on March 19. The center continued to incur operating costs during the shutdown, including electricity and security, which were necessary to protect art pieces.

The center also was forced to cancel weddings and other events. In April, it furloughed 42 people, a quarter of its full- time staff, and all of its part- timers.

The historical society said it was denied insurance coverage under the business interruption section of its policy, but the society said its losses are “direct” because the virus impacts the property itself.

“This loss is physical,” the suit said. “Plaintiff is unable to use its property in the manner in which it had previously used it. This loss is a loss. It is the loss of functionality of the space for business purposes. It is the diminishment of the physical space in the buildings. This is not a non- physical or remote loss such as one occasioned by a breach of contract, loss of a market or the imposition of a governmental penalty.”

The historical society said its direct physical loss is covered under causes of loss within the meaning of the insurance policy that it bought.

The history center reopened July 1 under strict protocols for operating during the pandemic.

The suit is seeking a court ruling that the coverage for the history center exists under the current insurance policy.

Chubb Insurance, the parent company of Federal Insurance Co., said covering business losses caused by the pandemic would “create infinite exposure” to the insurance industry.

“Chubb is concerned about all of our policyholders impacted by the pandemic, including the thousands of small businesses, cultural institutions and other organizations forced to close by government actions,” a company spokesperson said. “For more than 200 years, we have always strived to do the right thing, paying claims promptly and fairly. We are currently paying claims for pandemic- related losses in workers compensation, travel insurance, credit- related products as well as certain business interruption coverage where direct physical loss to the property is not required. The vast majority of policies, however, do not cover business interruption from pandemic risk, which would create infinite exposure for the insurance industry if applied to all policies. Creating false expectations about coverage that does not exist, including filing baseless lawsuits, will not solve this crisis.”