Treasure Island and Circus Circus Sue Insurance Companies Over Denied Claims
Phil Ruffin, the real estate tycoon who owns the Treasure Island and Circus Circus Las Vegas strips has sued the insurance companies covering both Las Vegas strips, Affiliated FM Insurance, and American International Group Specialty Insurance Company for refusing to cover the losses incurred as a result of the coronavirus pandemic. Ruffin expects the insurance policies to offer some coverage on the pandemic.
According to Bloomberg Law, the insurance companies have "broadly denied" claims for business losses during the pandemic. The insurance companies argue that there is a "lack of property damage," and that "there is no need for coverage if the virus isn't there to cause damage".
Treasure Island's lawsuit against Affiliated FM Insurance was issued in May. The resort paid over a million dollars for a policy that should supply close to $850 million for destroyed properties and $325 million for losses due to business disruptions, for instance, in the event of a pandemic.
Affiliated FM Insurance Company claimed in a letter sent in April that COVID-19 is a communicable disease and a clean up is included in its insurance policy, but denied the claim quoting a virus contamination exclusion.
The complaint alleged that “AFM refuses to show its hand and, instead, has doubled down on a calculated claims handling strategy designed to limit or altogether deny Treasure Island from the recovery it is entitled to receive under an insurance contract it has long-relied on as protection against unforeseen loss or damage and resulting loss of income. Undeniably, AFM chose to insure against loss caused by communicable disease, both at and away from Treasure Island’s property. AFM should be required to play its hand and cover Treasure Island’s losses.”
Treasure Island's complaint states that the insurance company owes them $1.1 billion in compensation.
Circus Circus' lawsuit against AIG Specialty Insurance Company was filed in July. The $1.6 million policy insurance coverage was "all risks" and includes physical loss and property damage which is about $500 million and loss of business income which is about $96.7million.
The AIG Specialty Company argues that the government's stay-at-home verdict and the virus itself are not covered.
A lawyer for the Circus Circus property alleged that “AIG relies on sleight-of-hand, distortions of fact and contortions of law to escape from Circus Circus’s covered claim. 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.”
The casino closed on March 18 after the Governor issued the order but the complaint claims that the virus was actually in the casino. "Persons infected with COVID-19 were present at Circus Circus prior to March 18, 2020. In fact, during the period January 1, 2020, to March 18, 2020, Circus Circus employees recorded more than 1,600 sick days. During that same period, Circus Circus had more than 337,000 registered guests from all over the world.”
These casinos join the rank of other businesses that have sued their insurance companies and are the first casinos to file lawsuits against their insurance companies as a result of the COVID-19 pandemic.
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