holding company for Circus Circus Hotel & Casino on the Las Vegas Strip is suing its insurance company after a COVID-19-related claim was denied.
The suit was filed July 2 in Nevada federal court by Circus Circus, LV, LP against AIG Specialty Insurance Company. Circus Circus' attorneys claim AIG failed to honor a contract for an "all risks" policy, arguing that the government-mandated stay-at-home orders and the virus itself are not excluded.
The policy, according to the lawsuit, covers the 3,800-room property against "all risks of direct physical loss or damage," FOX5 reports. Effective December 2019 through December 2020, the policy covers up to $500 million in coverage for physical loss or damage of the property and up to $96,774,307 in coverage for loss of business income. Circus Circus paid a $1.6 million premium for the policy.
At midnight March 18, the property closed its doors due to Nevada Gov. Steve Sisolak's directive amid the pandemic. Lawyers for Circus Circus claim persons infected with the virus were on property prior to the closure date. Between January 1 and the date of closure, employees recorded more than 1,600 sick days. In the same period, Circus Circus said they had more than 337,000 registered guests.
"On March 20, 2020, Circus Circus notified AIG that it had experienced, and was continuing to experience, a covered loss as a consequence of the physical loss and damage caused by COVID-19 and the resulting Stay at Home Orders and other civil authority orders," the lawsuit states. On June 19, AIG denied and refused to pay the claim, lawyers allege.
The lawsuit argues that the coverage policy by AIG does cover COVID-19, saying it is a "peril not excluded under the policy." Circus Circus lawyers argue that "direct physical loss" was experienced as a result of the ordered closure, and that "physical damage" is included due to COVID-19's ability to contaminate objects and surfaces.
Circus Circus joins hundreds of businesses that have sued their insurers over coverage of government-mandated shutdowns resulting from the pandemic, including at least one other Vegas casino that has taken its insurer to court.
In late May, Treasure Island LLC made similar claims against its insurer, telling a Nevada federal court that the presence of COVID-19 in its casino and resort has triggered coverage under its "all risk" policy with Affiliated FM Insurance Co., as reported by Law 360. The resort added that the insurer specifically said in an April letter that COVID-19 is a "communicable disease," the cleanup of which is covered under its policy, but denied its claim for coverage by citing a virus contamination exclusion. According to its complaint, Treasure Island is owed up to $1.1 billion in reimbursement.