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ViacomCBS has become the latest and perhaps biggest entity in entertainment to go to court against an insurer to recover losses in the wake of the COVID-19 pandemic. On Thursday, the media giant filed a breach of contract suit against Great Divide Insurance Company.
“When ViacomCBS turned to Great Divide for the promised insurance, ViacomCBS reasonably expected Great Divide to cover its losses,” states the complaint filed in California federal court. “However, instead of honoring its agreement with ViacomCBS, Great Divide interpreted the governing policy in an overly narrow and wrongful manner. Among other things, Great Divide has refused to acknowledge coverage for various losses, while improperly limiting the coverage available for other losses.”
According to the complaint, ViacomCBS has a “Television Production Portfolio Policy,” which provides $30 million of cast coverage, $10 million of extra expense coverage, another $10 million for imminent peril coverage, $1 million in civil authority coverage, and another $1 million in ingress/egress coverage.
Great Divide is taking the position that ViacomCBS can only collect on the civil authority coverage, meaning it would be limited to just $1 million arising from how government authorities made it impossible to proceed on hundreds of productions.
The two sides have gone back and forth in the past year over what policies are triggered. For example, in late April and early May, a representative of Great Divide is said to have told ViacomCBS’s representatives the imminent peril didn’t kick in because the claims did not present “certain, immediate and impending danger” to persons or property that “would be unreasonable or unconscionable to ignore.”
The dispute also figures to examine how an entertainment company like ViacomCBS chose to respond to the pandemic and how it fits into the language of the policy.
When ViacomCBS chose, for example, to delay the Kids’ Choice Awards and then hold the event virtually, it looked to its insurer for losses incurred. Great Divide asserted that the Kids’ Choice Awards was completed and aired and so nothing was owed. ViacomCBS disagrees, saying the virtual show was an entirely different production with a different number of crew, host, format, and performances. Produced in-house, the budget is said to have been significantly higher too.
The two sides are still at odds.
Now like many insurance companies, Great Divide is looking to its future by amending policies with specific COVID-19 exclusions. ViacomCBS says that’s not fair.
States the complaint, “Great Divide… has refused to acknowledge that, pursuant to its and the insurance industry’s long-established custom and practice and the relevant policy language, ViacomCBS is entitled to a third annual period of coverage without modification of the policy wording or cancellation or reduction of any of the policy’s coverages, except rate revision, as necessary. Great Divide refused to honor the existing policy terms. Instead, Great Divide offered only to continue the policy for its third annual period subject to a material reduction in the scope of insurance and/or an exorbitant premium. Specifically, Great Divide said that the policy would be continued only with the addition of an exclusion applicable to losses relating to COVID-19, thereby depriving ViacomCBS of the coverage that it purchased and was promised.”
ViacomCBS is represented by Kirk Pasich and his team at Pasich LLP, which has quickly become the go-to firm for entertainment companies wishing to sue insurers over COVID-19.
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