ViacomCBS Sues Insurer Over Denial Of COVID-19 Coverage

By Lauren Berg
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Law360 (January 15, 2021, 6:17 PM EST) -- ViacomCBS filed suit in California federal court Thursday, alleging Great Divide Insurance Co. reneged on its coverage agreement by refusing to protect the media giant from losses when it was forced to delay or cancel production for its television shows and live events due to the COVID-19 pandemic.

ViacomCBS, which produces television shows like "Yellowstone" and "Younger" as well as live events like the "Nickelodeon Kids' Choice Awards," said in its complaint that it bought an insurance policy from Great Divide, a subsidiary of W. R. Berkley Corp., to protect against losses should events ever disrupt its productions.

When the pandemic hit in March 2020, ViacomCBS said it delayed principal photography on more than 100 television productions and was forced to postpone productions, like the 2020 "Kids' Choice Awards." As a result, the company suffered substantial financial losses, according to the suit.

But when it turned to Great Divide for payment, ViacomCBS said the insurance company interpreted the policy in "an overly narrow and wrongful manner" and refused to cover various losses. And instead of continuing the policy, as required under the agreement, for its third annual period, Great Divide only offered to continue it if an exclusion was included for losses related to COVID-19, according to the complaint.

While Great Divide has had an insurance industry standard form exclusion for certain losses caused by viruses and bacteria since 2006, ViacomCBS said that exclusion was not part of its insurance policy. The policy provides $30 million of cast coverage, $10 million of extra expense, $10 million for imminent peril coverage, $1 million in civil authority coverage and $1 million in ingress and egress coverage, the suit states.

"Great Divide did nothing in selling the policy to limit its liability for virus- or pandemic-associated risks," ViacomCBS said. "Nor did Great Divide warn ViacomCBS that even though it did not include a virus or pandemic exclusion, it would interpret the policy as if it contained one."

The suit includes claims of breach of contract and seeks declaratory relief to have the policy renewed without any amendments. It also seeks coverage for losses on production, as well as damages and attorney fees.

Counsel for ViacomCBS did not immediately respond to a request for comment Friday and a representative for Great Divide could not be immediately reached for comment.

ViacomCBS isn't the only company to go after its insurance company for not paying out on COVID-19 losses.

Last month, hotel operator Procaccianti sued insurer Zurich American for failing to cover losses it incurred during state-mandated COVID-19 shutdown orders, while Zurich hit back saying its policy expressly excludes viruses as a covered cause of loss.

That same month, a Pennsylvania hotel said its losses from pandemic measures ordered by Gov. Tom Wolf should be covered by Westfield Insurance Co., while movie theater chain Cinemark Holdings Inc. is seeking more than $400 million from Factory Mutual Insurance Co. for unpaid COVID-19 business interruption claims.

Meanwhile, the owners of the Philadelphia Union Major League Soccer team this month sued Chubb unit Federal Insurance Co., alleging the insurer refused to honor its $192 million policy to cover COVID-19-related losses after their athletes caught the virus that affected its properties.

But judges have also recently been tossing these kinds of cases out left and right.

A London judge in December rejected a cafe owner's pursuit of Allianz for losses caused by the forced closure due to the pandemic, instead awarding the insurer's costs.

And just last week, a Florida federal judge tossed a Miami catering company's lawsuit seeking to force Scottsdale Insurance Co. to pay for COVID-19-related losses, while another Florida judge rejected a Miami restaurant chain's lawsuit seeking to compel Aspen Specialty Insurance Co. to cover its losses. A Texas federal judge shot down a dentist's suit seeking coverage from Aspen.

ViacomCBS is represented by Kirk Pasich, Anamay M. Carmel and Caitlin S. Oswald of Pasich LLP.

Counsel information for Great Divide was not immediately available.

The case is ViacomCBS Inc. v. Great Divide Insurance Co., case number 2:21-cv-00400, in the U.S. District Court for the Central District of California.

--Additional reporting by Theresa Schliep, Joyce Hanson, James Boyle, Katie Buehler, Daphne Zhang, Joanne Faulkner, Bonnie Eslinger and Mike Curley. Editing by Andrew Cohen.

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