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Family-Owned Lenexa Business Bought 'All-Risk' Insurance Policy And Is Now Suing To Get Its Payout From COVID-19 Pandemic

Before the COVID-19 pandemic, Sportsman Cap & Bag, a family-owned company since 1937, had projected $100 million in sales this year.
Dan Margolies
Before the COVID-19 pandemic, Sportsman Cap & Bag, a family-owned company since 1937, had projected $100 million in sales this year.

Sportsman Cap & Bag says its claims have been denied even though it bought an “all-risk” property insurance policy from The Cincinnati Insurance Co.

A promotional merchandise company based in Lenexa that has been forced to drastically reduce its operations because of the coronavirus is suing its insurer, saying it's refusing to honor the company's business loss claims.

Sportsman Cap & Bag, a family-owned business that traces its roots to 1937, says The Cincinnati Insurance Co. denied coverage even though Sportsman bought an “all-risk” property insurance policy from the insurer.

“The Cincinnati Insurance Company refuses to honor its promise to provide the protection that our client purchased,” Patrick Stueve, one of Sportsman’s lawyers, said. “Unfortunately, this is not a unique situation. The insurance industry appears to be taking a uniform approach to business interruption claims during this pandemic: no matter how clear the policy -- ‘deny coverage.’”

A spokeswoman for Cincinnati said the company respects “the rights of all parties to have their issues heard and resolved in a court of law. For that reason, we don’t comment on ongoing litigation.”

The lawsuit says that stay-at-home orders to fight the spread of COVID-19 have had a “devastating effect” on Sportsman’s business, which was projected to be more than $100 million this year.

“Because of the Stay at Home Orders and the transmission of COVID-19, several of its employees could not show up to work and risk becoming infected, preventing Plaintiff from meeting its sales targets,” the complaint states. “In a short period of time these events have caused the loss of nearly 95% of Plaintiff’s sales.”

Both Johnson County, where the company is based, and the state of Kansas have issued stay-at-home orders that currently last through May 3.

Sportsman’s complaint says its insurance policy covers direct losses and does not exclude coverage for losses related to viruses or pandemics.

“The insurance companies are telling brokers and the public that these policies only cover physical damage to the property and that they don’t insure against a pandemic,” Stueve said. “They may be doing this to deter businesses from filing claims, but many of the policies we have reviewed cover any non-excluded physical ‘loss.’”

The class action lawsuit, filed in federal court in Kansas City, Kansas, seeks a determination that Cincinnati should pay the business losses caused by the coronavirus to all holders of similar Cincinnati policies.

Sportsman’s predecessor company, Pioneer Cap Company, was founded by Abe Yeddis. Yeddis sold it in 1970 and started Promotional Headwear Inc. a few years later. The company operates under the name Sportsman Cap & Bag and sells custom promotional hats, bags and other marketing merchandise.

Dan Margolies has been a reporter for the Kansas City Business Journal, The Kansas City Star, and KCUR Public Radio. He retired as a reporter in December 2022 after a 37-year journalism career.
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