Kentucky daycare center sues insurer for at least $400,000 for denying COVID-19 claim
A daycare center in Richmond is suing a Wisconsin insurance company for at least $400,000 for denying its insurance claim for business interruption during the coronavirus pandemic.
ABC Daycare and Learning Center filed the 13-page lawsuit Friday in Madison Circuit Court against West Bend Mutual Insurance Company of West Bend, Wis.
The facility, which has a capacity of 395 children, is represented by Lexington attorney Robert E. Maclin III with McBrayer PLLC.
Elyise Brigman, a spokeswoman for West Bend, told the Herald-Leader she could not answer any questions “since this is an open case.”
The newspaper recently reported that daycare operators throughout the state are upset that their insurance companies were not honoring their business interruption claims.
Gov. Andy Beshear ordered the centers to close March 20, saying it was too risky to keep them open during the pandemic. He said Thursday they might be able to reopen June 15 at reduced capacity.
In a statement Monday, Beshear spokeswoman Crystal Staley said “the governor is supportive of these providers and urges the insurers to honor these claims.”
The Richmond daycare says in its suit that West Bend “unjustly rejected” its business interruption claim, disclaimed coverage and denied any liability.
The company, in an April 1 denial letter to ABC Daycare, said its policy “requires that a closure must be ordered by a local, state or federal board of health or similar governmental board, and that the closure is due to an outbreak at the insured premise for coverage to be ignored.”
The insurer also said it will not pay for any virus.
“That’s ridiculous,” said Maclin in a telephone interview Friday, noting the business had to close when testing for COVID-19 was unavailable.
“The applicable language and provisions of the West Bend policy are vague, confusing and ambiguous and not unequivocally clear and conspicuous,” said the lawsuit.
It said ABC Daycare “has and had a reasonable expectation” under the insurance policy that its claim would be covered.
ABC Daycare said its income losses are in excess of $100,000.
The suit also said West Bend has violated the Kentucky Unfair Claims Settlement Practices Act, resulting in the daycare center incurring additional damages, and has breached its contract.
It is asking the court to declare that its claim for $100,000 be covered and it receive not less than $300,000 for punitive damages “to punish West Bend from further bad faith acts.”
The center also is asking for reasonable costs, expenses and attorney fees and a trial by jury.
Sherelle Roberts, a spokeswoman for the state Public Protection Cabinet, which includes the Department of Insurance, recently said many insurers changed their policies after the 2003 SARS virus outbreak to stop businesses from filing claims for interruptions caused by virus outbreaks.
“All we can do is to tell each business to review your policy. It’s policy by policy. We have no control over it,” Roberts said.
This story was originally published May 11, 2020 at 11:06 AM.
