Caesars Sues Insurance Carriers, Saying They Declined to Cover $2 Billion-Plus of Losses
By Dave Sebastian
Caesars Entertainment Inc. has sued a group of insurance
carriers, accusing them of declining to cover an estimated loss of
more than $2 billion because of the Covid-19 pandemic.
The casino and hotel company alleges in the lawsuit that it had
purchased property insurance coverage to protect against "all risk
of physical loss or damage" and resulting business interruption.
Most of the policies don't exclude loss or damage caused by a virus
or pandemic, Caesars said in the lawsuit filed Friday in the 8th
Judicial District Court of Clark County, Nev.
The company said it has paid more than $25 million in premiums
to secure the all-risk policy portfolio providing more than $3.4
billion in coverage limits. Caesars, which was formed as a result
of Eldorado Resort Inc.'s combination with Caesars Entertainment
Corp. last year, swung to a loss of $1.76 billion in 2020.
The suit is the latest case of a company trying to recover lost
business during the pandemic through insurance. The insurers have
had the upper hand so far. Of the more than 200 rulings in suits
pitting businesses against insurers, more than 80% have been in
favor of insurers, according to a Covid-19 litigation-tracking
effort at the University of Pennsylvania Carey Law School.
The corporate-insurance arm of Allianz SE, which was one of the
firms named as a defendant, said it wouldn't comment on individual
situations, though it has been evaluating claims during the
pandemic on a case-by-case basis to determine coverage.
"We will certainly honor Covid-19-related claims where they are
part of our policies and cover is clear," Allianz said. "However,
many businesses will not have purchased cover that will enable them
to claim on their insurance for Covid-19 pandemic losses."
Caesars, like other casino owners, shut down its properties in
March 2020 as Covid-19 lockdowns began, the start of what Chief
Executive Thomas Reeg would later call "the most challenging year
that we've had operationally and personally to date." Its
properties now operate with local restrictions.
A cavalcade of restaurants, retailers and others hurt by
pandemic restrictions have sued to force their insurers to cover
billions in business losses. Millions of businesses across the U.S.
have "business interruption" insurance.
But insurance companies have largely refused to pay claims under
that coverage, citing a standard requirement for physical damage.
That is a legacy of its origins in the early 1900s as part of
property insurance protecting manufacturers from broken boilers or
other failing equipment that closed factories. The insurance is
also known as "business income" coverage.
However, in a win for insurance policyholders, the U.K. Supreme
Court in January ruled that insurers must pay out disputed claims
related to the coronavirus to a range of businesses. Rulings from
courts outside the U.S. normally don't have an impact on
insurance-coverage disputes in American courts, where judges rely
on individual state laws, said industry executives and
Write to Dave Sebastian at firstname.lastname@example.org
(END) Dow Jones Newswires
March 22, 2021 16:23 ET (20:23 GMT)
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