The Historical Society of Western Pennsylvania, which operates the Senator John Heinz History Center in Pittsburgh, is suing its insurance carrier to recoup business losses caused by the covid-19 pandemic.
The federal lawsuit, filed Monday against Federal Insurance Company, does not specify the financial loss other than saying it is greater than $150,000. It also said that many of the history center’s employees were either furloughed or terminated because of the government-mandated closure of all non-essential businesses in March.
In April, the history center furloughed 42 full-time employees — about a quarter of its staff — and all of its part-time employees, about 50 people, because of business loss, the lawsuit said.
The historical society was denied coverage under the business interruption loss portion of its insurance policy. However, in the lawsuit, it alleges that the shutdown was issued by “order of civil authority,” which should have triggered that provision.
“The coronavirus is physically impacting plaintiff,” the complaint said. “Any effort by defendant to deny the reality that the virus causes physical loss and damage would constitute a false and potentially fraudulent misrepresentation that could endanger plaintiff and the public.”
The history center bought the policy, the lawsuit said, “with an expectation that they were purchasing a policy that would provide coverage in the event of business interruption and extended expenses, such as that suffered by plaintiff as a result of the covid-19 pandemic.”
The lawsuit alleges that the insurance company never gave notice that there were exclusions to the policy that would “undermine the very purpose of the coverage.” The history center, on Smallman Street in the Strip District, was closed from mid-March until July 1, the complaint said.
Despite the closure, there were still operating costs incurred, the lawsuit continued, including electricity and security, required to maintain the artifacts in the museum. In addition, weddings and other special events scheduled there were required to be canceled.
Although the center reopened on July 1, following safety protocols, it is still being impacted by covid-19, the lawsuit said. In addition, the museum faces additional costs to mitigate damage from the virus, including increased sanitization.
“Any effort by defendant to deny the reality that the virus causes physical loss and damage would constitute a false and potentially fraudulent misrepresentation that could endanger plaintiff and the public,” the lawsuit said.
The lawsuit seeks a court judgment that coverage under the policy exists and is necessary for the history center.
In an emailed statement, a spokesperson for Chubb, the parent company of Federal Insurance, said it is paying claims for panemic-related losses for worker’s compensation, travel insurance and business interruption coverage “where direct physical loss to the property is not required,” the company said.
“The vast majority of polices, 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.”
As of Monday, 1,086 insurance lawsuits have been filed across the country, including 121 in Pennsylvania, according to law firm Hunton Andrews Kurth, which has developed a covid-19 litigation tracker.
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