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Casino’s COVID coverage dispute headed to trial

Posted On: Apr. 1, 2024 2:24 PM CST


A Las Vegas casino’s fight with an FM Global unit over coverage for losses caused by the COVID-19 pandemic will head to trial after a federal judge denied the insurer’s bid for summary judgment on the policyholder’s breach of contract claim.

The federal judge in Las Vegas said in Treasure Island LLC v. Affiliated FM Insurance Co. that triable issues exist as to whether the casino sustained physical loss or damage and if exclusions in its all-risks policy are applicable.

The judge did award summary judgment to the insurer on Treasure Island’s claims for bad faith and violation of the Nevada Unfair Claims Practices Act.

Treasure Island sued AFM in June 2020 seeking the full $1.18 billion in coverage limits it had for property damage and business losses caused by the COVID-19 pandemic. The casino contended that AFM wrongfully denied its claim on grounds that the losses were not caused by physical damage and that exclusions in the policy barred coverage, court records show.

The casino said in its lawsuit that its losses were caused by physical damage because the virus was present on its premises. Specifically, Treasure Island said two employees were on the premises in January 2020 and February 2020 and testified to having symptoms consistent with COVID-19.

The judge also found that the language in a communicable disease provision and a contamination exclusion appeared contradictory.

The dispute about whether Treasure Island’s property was physically damaged by the presence of the virus also affects the applicability of the loss of use exclusion and communicable disease provision, the judge said.

Representatives for the parties did not respond to requests for comment.