A few days ago, Caesars Entertainment Inc. started legal action against its insurance carriers that have refused to pay for the business interruption losses during the coronavirus pandemic.
As revealed by the US gambling giant, the company has lost over $2 billion over the course of the ongoing Covid-19 crisis. According to a filing with the US Securities and Exchange Commission dated March 22nd, more than $25 million in premiums had been paid by Caesars Entertainment in order to secure coverage for all risks, including physical losses or damages and business interruption unless policies tell otherwise.
In the lawsuit against its insurance carriers, the US gambling giant argues that the risk had not been excluded by the All Risk Policies but so far the insurers have done nothing to pay for the coronavirus-related business interruption at the company’s properties.
Many casino companies, including Caesars, were forced to cease operation of their properties across the US in 2020 as part of the Federal Government’s efforts aimed at tackling the further spread of the Covid-19 infection. The move, however, resulted in serious financial losses for the companies. Caesars Entertainment has projected that the losses will continue to pile up until it is able to resume its normal operations.
The legal action that was filed by the gambling company against its insurance carriers could help it compensate for some of the losses during the coronavirus closures. The lawsuit is not the first one in the sector, as many casino operators seek insurance companies to cover their losses experienced because of the ongoing pandemic.
Similar Lawsuits Filed by Other Las Vegas Gambling Operators, Too
Caesars Entertainment’s lawsuit claims that insurance providers had consistently rejected to pay similar coverage in similar cases, although they had received thorough documentation and evidence supporting such losses. According to the US gambling giant, there was an actual controversy concerning the right of the company to receive coronavirus-related coverage for its losses.
Caesars’ lawsuit includes sixty defendants. As the company explained, it is willing to reach a favorable resolution to the situation, seeking the insurance companies to pay for its losses and attorneys’ fees.
According to Allen Financial Insurance Group’s president Brent Allen, it is the insurance providers who bear the burden of proof with all-risk policies, many firms have so far managed to avoid paying the claims. Mr. Allen said it is mandatory for insurance companies to prove this specific coverage had been explicitly excluded from the all-risk policies’ coverage.
In a statement posted in April 2020, the major national trade association for home, business and auto insurers – the American Property Casualty Insurance Association – described pandemic outbreaks as “uninsurable” events. A spokesman for the US insurers’ trade body refused to comment on specific company contracts or ongoing legal action but shared an official statement that diseases or pandemic-related losses are not normally covered by business interruption insurance policies, as the latter are intended to cover physical damage.
As explained by the Association’s boss, coverage of business interruption losses associated with events such as the Covid-19 outbreak would undermine the insurance industry’s stability, making insurance carriers unable to pay claims on all existing insurance policies. According to him, the Federal Government could be the only financial bridge for a crisis of such a proportion, scale and duration.