Fifteen Minor League Baseball Teams are Suing Insurers Over the Denial of their Business Interruption Claim
According to a report from the South Florida Sun Sentinel, fifteen minor league baseball teams have already filed lawsuits against commercial insurance companies after their coronavirus-related business interruption claims were denied. The minor league teams are seeking insurance benefits for lost profits and other damages. Here, our West Palm Beach business litigation attorneys provide an overview of the business interruption insurance dispute.
Insurance Company: Denial Based on Lack of Direct Physical Loss and/or Virus Exclusions
While minor league baseball teams are typically attached to an MLB team, many of them are small, independent businesses. Due to the COVID-19 outbreak, minor league baseball is not expected to play at all in 2020. The unexpected disruption has put some of these organizations in a precarious financial position. Fifteen minor league baseball teams are now filing business interruption lawsuits after their claims were denied. The South Florida Sun Sentinel reports that the insurance companies are denying these claims on two grounds:
- Some of the business interruption policies contain virus exclusions; and
- Most business interruption insurance policies require a “physical loss”—and they argue that COVID-19 does not qualify.
Minor League Baseball Teams: Government Restrictions Amount to Physical Damage
In challenging the commercial insurance denials, the minor league teams are focused on several issues. One of the key points is that these minor league teams shut down their operations, largely because of government mandated restrictions. Indeed, in most of the country, minor league baseball teams cannot play games in front of fans even if they wanted to do so. State and local governments have temporarily barred large gatherings. The minor league baseball teams argue that the government restrictions amount to a physical loss.
Unresolved Issues—Do Not Assume Your Business Interruption Claim is Invalid
The lawsuits being filed by the minor league baseball teams are just the latest in a still developing trend. As reported by the American Bar Association (ABA), the COVID-19 pandemic has already prompted a wave of business interruption litigation. Many of the cases center around the same basic questions:
- Do business interruption virus exclusions always apply to COVID-19?
- Can virus exposure satisfy a “physical damage” element in a business interruption policy?
- Can you bring a business interruption claim on the grounds that your company closed its operations because of government restrictions?
These are still unresolved issues. Florida courts are set to weigh in on many business interruption disputes in the coming months. South Florida business owners should not assume that they are ineligible for coverage—even if their interruption claim has already been denied. Consult with an attorney about your case.
Call Our Florida Business Interruption Lawyers for Immediate Help
At Pike & Lustig, LLP, our South Florida business interruption attorneys are skilled, results-focused advocates for clients. If your business interruption claim was denied, we are available to help. For a confidential, comprehensive consultation, please call us today. We look forward to reviewing your case and helping you find a solution.