Sacramento Kings’ COVID Lawsuit Gets Go-Ahead From Court

In a rare policyholder win, a federal district court has refused to dismiss COVID-19-related business litigation filed by the Sacramento Kings basketball team and its venue against FM Global.

Plaintiff Sacramento Downtown Arena, which owns the team’s stadium in Sacramento, California, had purchased an FM Global all-risk policy that had a maximum coverage of $850 million per occurrence.

Its lawsuit -- Sacramento Downtown Arena LLC et al. v. Factory Mutual Insurance Co. -- was filed in U.S. District Court in Sacramento in March 2021.

The policy ‘at the center of this case can reasonably be interpreted as defining the presence of a ‘communicable disease’ as ‘physical loss or damage,’’ the ruling said.

‘The policy’s first sentence explains that it offers coverage only for risks of ‘physical loss or damage.’ It later lists ‘Additional Coverages for insured physical loss or damage,’ which include ‘’the reasonable and necessary costs incurred’ in response to government orders regulating the actual presence of a ‘communicable disease.’