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Houston Rockets sue NBA over denied pandemic coverage claim


The Houston Rockets filed a lawsuit against the team's insurer for denying a claim to recoup financial losses caused by the Covid-19 pandemic, according to multiple reports.

Rocket Ball Ltd. and Clutch City Sports & Entertainment LP, the respective holding companies for the Houston Rockets and the Toyota Center, sued Rhode Island-based Affiliated FM Insurance Co. on July 15, according to Rhode Island court records. The lawsuit asserts that more than $700,000 in annual premiums were paid for $400 million in business-interruption coverage, according to Bloomberg Law.

A business-interruption insurance policy is typically written to protect a company in the wake of a natural disaster or another event that would cause actual physical damage to a building or other tangible property, the Louisville Business Journal previously reported. The Rockets are the first NBA team to sue an insurer to recoup losses brought about by the Covid-19 pandemic, per the reports.

The lawsuit states that the coronavirus pandemic has forced the Toyota Center to cancel National Basketball Association games, concerts, a championship barbecue cookoff and other events that generate revenue. The team maintains that losing access to the Toyota Center represents "physical damage" that would trigger business-interruption coverage, per Bloomberg. Meanwhile, the Rockets are preparing to resume their 2019-20 NBA season at the ESPN Wide World of Sports Complex at Walt Disney World in Orlando, Florida.

An attorney representing the Rockets and the Toyota Center declined to comment to the Houston Business Journal on the matter. Representatives for the Rockets also declined to comment to the HBJ on the lawsuit.

Affiliated FM Insurance Co. provides commercial property insurance and is a member of Rhode Island-based FM Global Group. A spokesman FM Global declined to comment to Bloomberg Law. The HBJ has also reached out to a spokesperson.

The Rockets are owned by local billionaire Tilman Fertitta, who also owns several restaurants, hotels and casinos under his Landry's, Golden Nugget and Fertitta Entertainment companies.

More and more businesses are suing their insurance carriers as they refuse to cover losses related to Covid-19 shutdowns. Houston-based law firm Matthew & Associates is representing numerous local restaurants that are suing their insurance companies over denying claims on coronavirus-related losses. Star Cinema Grill, a Houston-based movie theater company, filed a similar lawsuit against its insurance provider earlier this year. Similar cases have been made in Raleigh, North Carolina; St. Louis, Missouri; and other cities.