The owner and operator of the high-end downtown Conrad Indianapolis hotel has sued its insurer for denial of millions of dollars in pandemic-related claims.
Circle Block Partners LLC, which owns the luxury 247-room hotel at 50 W. Washington St., filed the suit against Chicago-based Fireman’s Fund Insurance Co., on Sept. 29, claiming breach of contract by the insurer.
Circle Block does not disclose the specific amount it is seeking in its suit, but it does say its policy for the hotel provides coverage of up to $12.25 million in business-interruption losses, $1 million in communicable disease coverage, $2.5 million in civil authority coverage, $1 million in dependent property coverage and $2.5 million in business access coverage.
The policy also provides a maximum blanket coverage limit for business real property and personal property of $104 million, the plaintiffs said. Circle Block said it has suffered losses under all of those categories.
The lawsuit contains a document that shows Circle Block Partners paid $94,108 in premiums to Fireman’s for insurance coverage in 2020.
Like most hotels, the Conrad has been hammered by the pandemic and the related shutdown of conventions and other hospitality-related events and establishments that create business for the hotel.
According to lawsuit, the Conrad’s business plummeted almost immediately when stay-at-home restrictions were implemented in March. Occupancy rates fell into the single digits as reservations were canceled and new bookings ceased.
“On March 19, 2020, only six of the hotel’s 247 rooms were occupied,” the suit says. “As a luxury property, the Conrad is not a hotel that is used for long-term lodging, and the slowdown (virtual shutdown) of its operations rendered continued operation untenable. The hotel was forced to suspend its operations entirely on April 18, 2020.”
The Conrad reopened in July but has continued to see a significant decrease in business.
Circle Block said it filed a notice of claims to Fireman’s Fund on March 23 and a claims adjuster said the insurer would review the claim. The hotel owner followed up with a demand for indemnity on May 6.
On Sept. 2, more than five months after filing its initial claim, Fireman’s Fund notified Circle Block that it was denying its claim in full.
Fireman’s Fund did not respond to phone call seeking comment about the lawsuit.
Circle Block Partners is a partnership that includes Kite Realty Group Trust veterans Al Kite, John Kite and Tom McGowan. The city also has a small stake in the partnership. The Kite executives declined to respond to a request for comments on the suit.
According to legal experts, shutdowns and crowd restrictions imposed by state and local governments to limit the spread of the coronavirus have resulted in more than $1 trillion in estimated losses by thousands of businesses. That has prompted a flood of claims under business-interruption insurance policies that have been almost universally rejected by insurers.