Caesars Sues Insurance Firms for $2 Billion for Nixing COVID Payout
Posted on: March 23, 2021, 05:34h.
Last updated on: March 23, 2021, 10:37h.
Caesars Entertainment is suing a group of insurance firms for $2 billion for, in its opinion, welching on a bet. In a note to the SEC Monday, the US casino giant says insurers have refused to pay out on an estimated $2 billion in losses caused by the coronavirus pandemic.
This, despite Caesars having paid $25 million in premiums towards “a top-of-the-line, all-risk policy portfolio” that promised to ensure against “all risk of physical loss or damage,” the company said.
Among the defendants in the case are some of the country’s most recognizable insurance companies, including Allianz, Chubb, Aspen, and Lloyds of London.
Odds Favor Insurers
As the biggest casino operator in the US, Caesars was heavily exposed to financial loss resulting from the widespread closure of casinos that occurred in March last year.
Caesars was greatly enlarged by last year’s merger with Eldorado Resorts. It now owns 50 properties in 16 states across America, all of which were shuttered at various times last year in an effort to slow the pandemic.
“Government orders have required, at various times, in various degrees, and in various locations, shutdowns, lockdowns, facility closures, quarantines, travel restrictions, and operation restrictions, all of which substantially impacted Caesars’ properties and businesses,” Caesars’ said in a lawsuit filed Friday in the Clark County District Court in Las Vegas.
Caesars is not the first casino company to sue its insurers in a bid to recoup losses from the pandemic. Others, including Treasure Island and Circus Circus owner Phil Ruffin, are among hundreds of businesses from numerous sectors that have tried their luck against intransigent insurance firms. Ruffin’s case was dismissed last month in favor of his insurance company, AIG.
According to The Wall Street Journal, the insurers have had the upper hand, so far winning around 80 percent of roughly 200 lawsuits.
Ceasars’ Argues Pandemic Causes Physical Damage
Typically, insurers are arguing that claimants need to show their business and properties have suffered actual physical damage from the pandemic. And courts are ruling that the temporary closure of a property doesn’t cause physical damage in the way that a fire or a hurricane would.
Caesars argues that the disruption to its business caused by the pandemic does constitute physical damage.
“This risk [from pandemics] was covered and not excluded in the All-Risk Policies at issue,” Caesars argued in the lawsuit, but it acknowledged that the odds may be stacked against it.
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