Aspen Claims Service

Cinema Owner Sues Insurer Over COVID-19 Claim Denial, Despite Pandemic Coverage

 Wednesday, April 8, 2020

 KHOU 11

A local dine-in theater company thought it was prepared for a crisis like COVID-19. When public health officials forced the closure of its nine Houston-area locations in March, the owners thought they were covered.

“For medium-sized businesses that purchase this policy, it gives them peace of mind that they have are going to have some sort of revenue,” said Michael Hawash, attorney for SCGM Inc., which operates Star Cinema Grills and District Theaters.

The “pandemic event” insurance policy was marketed by underwriters as a way to “boost your establishment’s immunity” and “vaccinate your bottom line” during an outbreak.

As advertised, the coverage would reimburse loss of wages, cleaning and other mitigation-related costs and crisis management expenses if a public health authority shut down operations.

Star Cinema grill signed up, paying nearly $40,000 in premiums for $1 million in coverage, according to Hawash. But he said instead of peace of mind, his client has experienced headaches and hassles after filing a claim.
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