Movie Producer Sues Chubb for Breaking Renewal Promise Over COVID-19

September 14, 2020

A movie production company that signed Ben Affleck to star in its latest “large-budget action thriller” accuses a Chubb insurer of violating longstanding custom and practice by refusing to extend a $58 million insurance policy after the film was delayed because of the coronavirus outbreak.

Hoosegow Productions says in a lawsuit filed in Los Angeles federal court that Chubb National Insurance Co. had promised that it would extend a policy that insured the cast and crew of a movie called Hypnotic, which was scheduled to begin filming in April. After pandemic closure orders delayed production, Chubb refused to renew the policy without a modification that excluded coronavirus, the suit says.

Chubb made COVID-19 exclusion a “global position” after coronavirus shutdowns began, according to the lawsuit. Hoosegow alleges it can no longer purchase production risk insurance without a coronavirus exclusion, which means it cannot renew production of Hypnotic.

“Chubb National’s conduct is despicable and has been done with a conscious disregard of Hoosegow’s rights, constituting oppression, fraud, and/or malice,” the lawsuit says. The complaint alleges breach of contract, fraudulent promise and inducement and negligent misrepresentation.

Hoosegow says it originally intended to purchase a policy starting coverage of the production on this March 21 and expiring a year later. A Chubb underwriter suggested that the producer set the policy to expire on Oct. 28, 2020 to conform with the expiration date of other policies that Hoosegow had purchased from Chubb.

Hoosegow says it agreed only because Chubb had extended coverage for other productions before that had to be delayed, without any changes in terms. The company also had Chubb’s intentions in writing: Its underwriter said in an email that the policy “could extend as necessary.”

The suit says Chubb had good reason to expect the insurer would live up to its promise given its marketing materials. The lawsuit notes a statement on the insurer’s website, “Chubb is there for our clients in good times and bad.” Another blurb says Chubb is different because “it honors the promises we made to you.”

Hoosegow purchased a policy with $58 million per-occurrence policy limits that paid out if any key cast and crew members, including Alleck and director Robert Rodriguez, could not complete the film due to illness or “imminent peril.” Hypnotic was to star Affleck as a detective who becomes wrapped up in a mystery over his missing daughter and a secret government program while investigating a string of high-end heists.

After the emergence of coronavirus, the producer asked its broker, Arthur J. Gallagher, to inquire about extending the policy, as was discussed originally.

Hoosegow said Chubb did not respond until two months later, when it advised the broker that the policy could be renewed with a virus exclusion. When the producer’s attorney reminded Chubb that its underwriter had promised that the existing policy could be extended if production could be delayed, the insurer replied that it had already communicated its terms to Hoosegow’s broker. In that note and later correspondence, Chubb did not address Hoosebow’s assertions that its underwriter had promised to extend the policy, the lawsuit says.

“Thus, not only did Chubb National wrongfully refuse to reconsider its position, it refused to give any substantive explanation for its position or otherwise engage in a dialogue with its insured. In so doing, Chubb National breached its duty of good faith and its obligation to fairly handle all claims under the Policy.”

The lawsuit says that Hoosegow has suffered damages because of Chubb’s actions, but that the amount is not yet known. Hoosegow said it will amend the complaint when the extent of damages is known.

Chubb had not filed a response to the lawsuit as of Friday afternoon. The insurer’s media relations department did not respond to an email requesting comment.

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