Mississippi Casino Demands $100M from Insurer for COVID-19 Losses, Damages

Posted on: November 21, 2020, 09:14h. 

Last updated on: November 21, 2020, 06:07h.

The parent company of Mississippi’s Island View Casino Resort has filed a $10 million federal lawsuit against its insurance company. The suit alleges the company is not covering losses related to the coronavirus pandemic.

Many businesses have filed similar lawsuits against their insurance companies
Mississippi’s Island View Casino Resort (above) has filed a $10 million federal lawsuit against its insurance company. The company allegedly failed to cover COVID-19 losses. (Image: TripAdvisor)

Gulfside Casino Partnership is also in court seeking $90 million in punitive damages, attorneys’ fees, and interest from Westchester Surplus Lines Insurance Co., an excess and surplus lines provider, affiliated with Chubb.

The casino operator argues its policy should have covered losses related to the pandemic. The gaming property claims it lost $46.2 million when it was shut down between March 16 and May 21.

The casino was forced to shutter by a directive from the Mississippi Gaming Commission. Similar casino closings happened across the US in response to the coronavirus outbreak.

Among the allegations in the Mississippi lawsuit are breach of contract and negligence. When asked about the court action, Chubb spokesman Eric R. Samansky told Casino.org on Saturday, “As a matter of policy, we do not comment on pending legal matters.”

It appears Westchester Surplus Lines Insurance Co., divided shares of the risk to nine other insurers, the Associated Press reported.

Joe Sam Owen, a Mississippi lawyer who represents the casino’s parent company, explained to the AP a key issue in the case relates to how the phrase “physical damage” is defined.

Insurance Companies Won’t Pay Without Physical Damage

The insurance sector generally holds a property must have experienced physical damage in the event. That would be something like from a hurricane.

Without that standard, the company would not have losses covered, many insurance companies have argued. But the Mississippi casino says it is covered “whether or not physical damage occurs to the property,” the AP said.

Also, the casino company argues any losses from canceled reservations or having been ordered to close and therefore unable to make reservations would be covered in a pandemic.

The gaming property company argues that a pandemic is covered as “a contagious or infectious disease at an insured location, as determined by a public or civil authority,” the AP adds.

Because its policy had cancellation coverage, the Island View Casino had to pay $408,268 a year for the premium, the company says.

But Crawford Global Technical Services, an insurance consultant which reviewed the casino’s claim, explained to the casino’s parent company, “As a general matter, the policies afford coverage only when there has been direct physical loss, damage or destruction. In the absence of such damage, there is not coverage,” the AP reported.

Viruses are among the items not covered, the firm adds. It also said a “communicable disease” is not covered.

In July, Circus Circus LV, LP,  a holding company for the Las Vegas Strip venue of the same name, filed a lawsuit against American International Group (AIG). It joins a parade of companies pursuing litigation against insurance providers refusing to cover losses stemming from the coronavirus pandemic.

“AIG relies on sleight-of-hand, distortions of fact, and contortions of law to escape from Circus Circus’s covered claim,” the Circus Circus lawsuit said. “But no illusion or death-defying feat can alter the plain language of AIG’s policy and the broad all-risks coverage that it provides.”

Earlier this year, Evan Greenberg, CEO of Chubb Limited, told CNBC their company would cover only a limited amount regarding the pandemic.

“Putting business interruptions aside, the industry is likely to pay out, in the pandemic, somewhere in the range of $100 billion globally,” Greenberg said.

Losses at Least $1 Trillion

Also, the American Property Casualty Insurance Association, a national trade group, said government-ordered coronavirus closures cost businesses $255 billion to $431 billion per month. Losses were estimated earlier this year at $1 trillion, the association adds.

Viruses, like COVID-19, do not cause physical property damage. Thus, they are not typically covered under insurance. In the vast majority of cases, insurers did not price policies to include such coverage, and policyholders did not pay premiums to have this coverage,” David A. Sampson, president and CEO of the American Property Casualty Insurance Association, said in a July statement.