Cinemark sues insurer for $400 million loss

To mitigate economic devastation, Cinemark slowly reopened many of its DFW locations, including Cut! By Cinemark in Frisco.

Plano-based movie theater chain Cinemark filed a lawsuit against its insurer for unrecovered losses, Bloomberg reported Tuesday.

The suit, which was filed at the 471st District Court in McKinney, alleges that Factory Mutual Insurance neglected to fulfill its contractual obligations after refusing to cover $400 million in losses and legal expenses that were incurred as a result of the COVID-19 pandemic.

“The governmental orders, the damage caused by [COVID]-19, and the transmission of [COVID]-19 have had a devastating effect on Cinemark’s business,” the complaint said.

It further alleges that Factory Mutual “chose to insure against loss caused by communicable disease, both at and away from Cinemark’s property,” but in a brief filed Tuesday, the defendant claims that Cinemark “cannot show the actual, not suspected, presence of communicable disease” at the chain’s locations.

The cinema also claims that almost 500 employees had symptoms between June and November, and that it paid $3.8 million in premiums for a policy that covered up to $500 million in losses. The policy reportedly expired on Apr. 20, one month after the start of the lockdown.

This news comes after months of economic devastation for Cinemark and its competitors. The country’s third largest movie theater chain shuttered all 345 of its locations due to the pandemic in March, which the company cited "as a proactive measure in support of the health and safety of its employees, guests and communities." To combat the resulting financial losses, Cinemark slowly opened select locations all across the Dallas area, where strict health guidelines were implemented.

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