Las Vegas strip resorts Circus Circus and Treasure Island, owned by billionaire casino mogul Phil Ruffin, have filed lawsuits against their insurance companies claiming they spent millions for coverage in the event of a disaster, but their insurers refused to cover their COVID-19-related claims.
A business owner’s policy generally provides core coverages such as commercial property insurance, which provides coverage for building, equipment and inventory, and business interruption insurance, which covers operating costs in the event a business must temporarily close due to a disaster. For example, if a fire breaks out in a restaurant and the restaurant must close, the commercial property portion of the business owner’s policy would cover building repairs while the business interruption portion of the policy would cover expenses like payroll and bills until the restaurant can reopen.
Circus Circus says it paid its insurer, AIG Specialty Insurance Company, $1.6 million for insurance that covered up to $500 million for lost or damaged property and $96.7 million for lost income. On March 20, when government-mandated stay-at-home orders and business shutdowns caused Circus Circus to temporarily shutter its operations, the company filed a claim with AIG. But AIG denied the casino’s claim.
“AIG refuses to stand by the insurance policy that it wrote and sold and honor its contractual undertakings,” Circus Circus said in a lawsuit against AIG. “Instead, AIG relies on sleight-of-hand, distortions of fact and contortions of law to escape from Circus Circus’s covered claim.”
Treasure Island filed a separate lawsuit against its insurer, Affiliated FM, for rejecting its claim. Treasure Island allegedly paid the insurance company nearly $1 million for up to $850 million in property damage insurance and up to $327 million for operating expenses. “AFM should be required to play its hand and cover Treasure Island’s losses,” the casino’s lawsuit states.
Circus Circus and Treasure Island are among a growing number of businesses across the country that have filed lawsuits against their insurance companies for not covering their COVID-19 business interruption claims.
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.