MLB is suing its insurance providers over COVID-19 losses

It has been reported in many places, including here in October, that Major League Baseball had reduced revenues of up to $3 billion in 2020. This was primarily due to not being able to have fans in ballparks.

Now, per the Associated Press, MLB is filing suit against its insurance providers to try to recover some or all of that money:

It says providers AIG, Factory Mutual and Interstate Fire and Casualty Company have refused to pay claims made by MLB despite the league’s “all-risk” policy purchases.

The league claims to have lost billions of dollars on unsold tickets, hundreds of millions on concessions, tens of millions on parking and millions more on suites and luxury seat licenses, in-park merchandise sales and corporate sponsorships. It also cites over a billion dollars in local and national media losses, plus tens of millions in missed income for MLB Advanced Media. It says all of those losses should be covered by their policies.

This is obviously a big deal if MLB would succeed in winning this suit. Here, though, is what appears to be the key portion of the suit:

Insurers in many cases have insisted that financial losses caused by the coronavirus do not constitute physical loss or property damage. MLB is claiming the virus has led to both.

“The presence of the coronavirus and COVID-19, including but not limited to coronavirus droplets or nuclei on solid surfaces and in the air at insured property, has caused and will continue to cause direct physical damage to physical property and ambient air at the premises,” the suit says. “Coronavirus, a physical substance, has attached and adhered to Plaintiffs’ property and by doing so, altered that property. Such presence has also directly resulted in loss of use of those facilities.”

I am not a lawyer — and please, those of you who are lawyers, please let us know what you think — but it’s my feeling that having the coronavirus “in the air” doesn’t constitute property damage. I think you can see that if MLB were to win this lawsuit, it’s unlikely that any insurance company would insure the league or its teams going forward. A victory in a suit like this could also lead to similar lawsuits by any type of business where the coronavirus is “in the air” or “on solid surfaces” which could be pretty much anywhere — restaurants, retail stores, etc. This article has quite a bit of detail about how COVID-19 can — and can’t — be transmitted.

It’ll be interesting to see where this lawsuit goes. In my non-legal opinion, it’s not going anywhere.

Lastly, I will remind you that political commentary is not permitted at BCB. Thanks in advance.