Island View Casino Parent Company Sues Insurer Over COVID-19 Losses

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Gulfside Casino Partnership, the owners of Island View Casino Resort in Mississippi, has filed a $10M federal lawsuit against its insurance company for COVID-19 losses. Gulfside Casino Partnership is also demanding $90M in punitive damages, attorney’s fees, and interest.

The Misissippi casino says that it has lost $46.M when it was forced to close from March 16 to May 21, 2020 per instruction of the Mississippi Gaming Commission. However, the policy only covers up to $10M.

The case alleges breach of contract and negligence against the Georgia-based Westchester Surplus Lines Insurance Co. which is affiliated with Chubbs. According to a report from the AP Westchester divided shares of the risk to nine other insurers.

Won’t Pay Unless There is Physical Damages

Gulfport lawyer Joe Sam Owen, who represents Chubbs, said that legal claims related to COVID-19 have boiled down to the definition of “physical damage”. As a general rule, insurance companies argue that properties must suffer actual physical damage to recover losses under their insurance policies.

But Gulfside Casino argues that its policy specifically covers the losses caused by its inability to accept bookings or cancelled bookings brought about by “a contagious or infectious disease at an insured location, and as determined by a public or civil authority”. Because its insurance policy had cancellation coverage, the Mississippi casino paid $408,268.00 per annum for the premium.

Not Covered

Last July, insurance consultant Crawford Global Technical Services was tasked to review the claim of the Mississippi casino. In a letter sent to Island View Casino, Crawford Global said that “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.”

Crawford Global added that pollutants and contaminants such as virus are not covered. Likewise, communicable disease is not covered in other policy language. Last July, Circus Circus LV also filed a lawsuit against American International Group (AIG), joining a long list of companies in various industries pursuing litigation against its insurers.