Coronavirus has shut down all Hollywood productions and delayed the release of all films in theaters. That means millions of dollars lost in production cost and box office receipts. Now the big question that studios large and small are asking is: How much will insurance cover?
Allianz, which is one of the main insurers for entertainment companies, estimates that Hollywood studios paid $400 million in insurance premiums last year to cover “unforeseeable events.” Now, understandably, studios are looking to collect.
Allianz says it is seeing a growing influx in claims recently as studios have been forced to shut down major productions, and they, along with other big film insurers, are now flooded and trying to figure out which claims they can deny. Studios are starting to get denial of coverage letters now, which means lots of legal action in the near future.
“I think what the insurance companies will say is we never intended to cover you for losses sustained because a pandemic occurred and people now couldn’t go to theaters… That wasn’t intended or covered,” said Sarah Cronin, a partner at law firm Venable and an expert on entertainment industry insurance claims.
“I think the studios would reply, “We took out insurance in case we need to make a change that was unanticipated and there were substantial losses,” she continued. “It’s all going to come down to what language is in each insurance policy.”
Grab your popcorn folks, this is sure to make for a thrilling legal drama.