Oklahoma Music Venue Claims Covington Specialty Insurance Co. Refuses to Cover Pandemic Damage Claim

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According to a proposed class action, Covington Specialty Insurance Company has, “on a widescale and uniform basis,” refused to pay insureds for losses sustained as a result of the COVID-19 crisis.

Filed by a Tulsa, Oklahoma music venue, the 26-page lawsuit claims the plaintiff purchased a Covington property insurance policy that included business income, civil authority, extra expense, and sue and labor coverage. The “all-risk” policy, the suit says, purported to pay for “direct physical loss” to the covered property unless the cause of loss is specifically excluded from coverage.

The plaintiff claims its policy contained no exclusions for losses caused by viruses, noting that the only related exclusion was an undefined “Exclusion of Pathogenic or Poisonous Biological or Chemical Materials.” The lawsuit argues that the lone exclusion applies only to “an escape of contaminants from a place of containment,” and not the natural spread of a virus.

According to the case, the plaintiff suffered covered losses after executive orders issued in Oklahoma and the city of Tulsa closed places of public accommodation and limited social gatherings. The venue has been unable to operate since March, the lawsuit says, and can now operate at only limited capacity under Phase 3 of Oklahoma’s Open Up and Recover Safely (OURS) Plan, which allows music venues to operate while observing social distancing.

The plaintiff says that although its losses stemming from the suspension of operations should have been covered under its Covington insurance policy, the defendant denied the venue’s claim. The lawsuit suspects that Covington has similarly denied other insureds’ COVID-19-related claims “on a widespread and uniform basis” in violation of its policies.

The case comes amid a growing trend of lawsuits, including several filed by music venues, against commercial property insurers over their alleged failure to pay policyholders’ pandemic damage claims.

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