Baltimore, Maryland-based Cordish Cos., operator of casinos, entertainment centers, malls, and hotels across the country, has filed a breach of contract lawsuit against its insurance provider for failing to cover millions of dollars of COVID-19-related losses its businesses suffered during government-mandated shutdowns to stop the spread of the coronavirus.
Cordish’s insurer Affiliated FM Insurance Co., rejected the company’s claims, arguing that communicable diseases are not covered under its policies.
Cordish had filed a business interruption insurance claim, part of its business owner’s insurance policy that provides coverage of operating expenses in the event a business has to temporarily close due to a disaster. For example, if a fire breaks out in a casino and it must temporarily close its doors for repairs, then the casino’s business interruption plan would cover the cost of payroll, bills, and related costs.
But Affiliated, like dozens of other insurance companies across the country, is rejecting business interruption claims arguing that pandemics are not the kind of disaster it covers. Cordish asserts that’s not what its policy says. In fact, its policy specifically states coverage under “communicable disease – property damage” and “communicable disease – business interruption,” the lawsuit states.
“Unlike a retail store selling a product, or a traditional restaurant selling food and beverages, the sports and entertainment businesses primarily sell experiences that involve customers coming into and moving about the premises and interacting with one another there,” the lawsuit states. Cordish’s Live! Casino in Baltimore usually sees about 18 million visitors a year and generates revenue of more than $50 million a month. But because of COVID-19-related state mandates, the casino was completely closed.
Beasley Allen lawyers are actively investigating and filing similar claims against various insurance companies for denial of business interruption coverage during the COVID-19 pandemic, and are involved in advocating for consolidation of these actions in multidistrict litigation (MDL). Dee Miles, head of our Consumer Fraud & Commercial Litigation Section, Rachel Boyd, and Paul Evans, lawyers in the Section, are spearheading this litigation for our firm and are monitoring all MDL developments as they arise.