NHL and 20 teams sue insurance providers for not covering COVID losses

Five companies that provide insurance to the National Hockey League are being sued by the NHL and 20 of its teams for not covering money lost during the COVID-19 pandemic. While there is no specific amount being sought in the lawsuit, the league says losses due to COVID have exceeded $1 billion.

According to a report from TSN, all Canadian teams are involved in the suit except the Calgary Flames and Edmonton Oilers. It's not clear who the rest of them are.

«Some cities that have a stake or interest in an NHL arena may have insurance coverage beyond what the NHL has put together,» said Mary Kelly, a professor of finance and chair of insurance at Laurier University's Lazaridis School of Business and Economics in Waterloo, Ont.

In its court documents, the NHL said its insurance policies include "when a communicable disease physically alters the air and surfaces within the clubs' arenas, making them unfit for their intended use." However, one of the companies has asked for the suit to be dismissed saying the league "does not allege any physical loss or damage to plaintiffs' property, which is a threshold requirement of the coverages plaintiffs seek." Kelly told TSN that she reviewed the case and doesn't believe the league will have an easy go.

"It looks like a pretty airtight policy," she said. "Clauses related to a business interruption by communicable diseases are really designed for incidents like an outbreak of Legionnaires' Disease [a serious type of pneumonia that's contracted by breathing in infected bacteria]."

She added claims related to a communicable disease are usually capped at $1 million, which she said would be "peanuts for the NHL."

Another assistant professor of finance reviewed the case for TSN and said that the NHL would have to prove that the damage caused by COVID is a "direct physical loss", something he doesn't believe would be easy to do.

The NCAA collected more than 270 million from insurance companies after the cancellation of March Madness in 2020. The organizers of Wimbledon received around $140 million from its insurers. Major League Baseball is in the process of suing insurers, while the Ontario Hockey League is doing the same.

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