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MLB sues insurers, citing failure to cover COVID-19 losses

Major League Baseball (MLB) and all of its 30 teams are suing its insurance providers, after claiming they refused to cover the billions of dollars of losses due to the coronavirus pandemic.

The suit, which was filed in October in the California Superior Court, states that its providers AIG, Factory Mutual, and Interstate Fire and Casualty Company refused to pay claims made by MLB, despite the league’s “all-risk” policy purchases, leading to all 30 teams, the baseball commissioner’s office, MLB’s digital and streaming services, MLB Network and to collectively sue them.

Reports earlier this year indicated that MLB had seen losses of up to US$3 billion from unsold tickets, concessions, parking, seat licenses, merchandise sales and corporate sponsorships.

In March, MLB cut short spring training before returning to a postponed season in July, where spectators were unable to purchase tickets to watch the games live and in-person. The regular 162-game season was reduced to only 60 games before the postseason saw a welcome return to a small capacity of fans for the National League Championship Series and World Series.

“Due to COVID-19, the Major League Baseball entities, including those of the 30 major league clubs, have incurred significant financial losses as a result of our inability to play games, host fans and otherwise conduct normal business operations during much of the 2020 season. We strongly believe these losses are covered in full by our insurance policies and are confident that the court and jury will agree,” read a statement from MLB.

Similar suits have been filed by minor league baseball teams, who saw their league cancelled completely due to the coronavirus pandemic. One of those teams, the Chattanooga Lookouts, saw their case dismissed due to a virus exclusion in the policy.

Insurers are claiming that coronavirus related losses do not constitute physical loss or property damage, something that is contested by MLB.

The statement added: “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.

“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.”

It remains unclear whether the 2021 season will resume on time.

Author: Jake Wilkin