UPDATE: On Nov. 16, 2020, Treasure Island told the court that its coronavirus business interruption insurance claim cannot be capped at $200,000.

Treasure Island Las Vegas is suing its insurance company for breach of contract, accusing it of wrongfully denying coverage for losses suffered due to COVID-19.

Treasure Island reports it has lost nearly $1 billion since Nevada Gov. Steve Sisolak ordered a statewide shutdown of casino operations in mid-March.

Insurance company Affiliated FM sold Treasure Island Las Vegas the policy, which the casino says covers it against “all risks of physical loss or damage, except as … excluded.”

The policy also reportedly covers Treasure Island for up to $327 million in losses due to interruption of business in certain circumstances, as well as up to $850 million for property damage.

Treasure Island Las Vegas paid a nearly $1 million premium for the coverage, according to the lawsuit.

The policy’s effective end date was March 20. Treasure Island casino’s last day of operation before the shutdown was March 17, according to a report by Las Vegas CBS affiliate 8 News Now.

Have you faced insurance complications or denials due to COVID-19? Get legal help here.

Sisolak’s shutdown order was issued over concerns about the spread of the novel coronavirus, which the World Health Organization believed could be spread by human-to-human transfer and can exist on contaminated surfaces such as copper, plastic and stainless steel. Treasure Island Las Vegas has these materials throughout its facilities.

“Stay At Home Orders, the damage caused by COVID-19, and the transmission of COVID-19 have had a devastating effect on Treasure Island’s business,” the lawsuit says.

Treasure Island closed its doors at 12:01 a.m. March 18, in accordance with Sisolak’s order, but some damage had already been done.

Customers infected with COVID-19 were present at Treasure Island casino before March 18, the lawsuit states.

Between Jan. 1 and March 18, more than 1,500 sick days were recorded for Treasure Island employees. During that same period, the resort welcomed more than 329,000 registered guests.

On April 29, Sisolak issued a directive explaining the basis for his previous order, stating because COVID-19 could survive on surfaces for an unknown amount of time, some property was rendered unusable and contamination, damage and property loss were possible.

Treasure Island Las Vegas’ policy with AFM expressly covers costs incurred for the “cleanup, removal and disposal of … communicable disease from insured property,” the lawsuit states.

The casinos’ claim is that by providing for such cleanup, the policy recognizes communicable disease physically damages property.

Treasure Island Las Vegas’ insured property includes the resort itself on the Las Vegas Strip, and an office/warehouse facility away from the resort.

In addition to losses suffered due to the absence of guests at the casino resort, Treasure Island also claims COVID-19 has caused damage and loss to the company’s direct and indirect suppliers, customers and contract service providers.

The casino company’s lawsuit claims no exclusions listed in the policy preclude or limit coverage due to the presence of COVID-19.

Treasure Island Las Vegas alleges AFM acted in bad faith when it executed a plan to steer its policyholders “into at most, the On-Site Sublimited Communicable Disease Coverages” for COVID-19 losses in response to Treasure Island’s claim.

AFM and Treasure Island reportedly had a phone call in early April to discuss the casino company’s claim. During that call, the conversation shifted to casino employees who had tested positive for COVID-19.

Treasure Island’s lawsuit alleges a follow-up letter to the phone call “grossly mischaracterized” the call’s content and claimed the casino company had been unaware of any employees testing positive for coronavirus, a claim the casino says is false.

A second letter from AFM to Treasure Island on April 16 stated coverage for COVID-19 was not available “absent any physical loss or damage of the type insured.”

The coronavirus lawsuit says AFM has a set of “Talking Points” used by claims adjusters to ensure the same conclusion is reached for all COVID-19 claims, representing a systematic attempt to deceive policyholders.

Treasure Island is seeking a jury trial and a declaration from the Court that the casino’s insurance policy’s coverage provisions are triggered by Treasure Island’s claim and that no exclusion applies.

The complaint also asks for “special and consequential” damages against AFM in excess of $75,000, pre- and post-judgment interest, attorneys’ fees and court costs and any other relief deemed appropriate by the Court.

Treasure Island Las Vegas is represented by Renee M. Finch of Messner Reeves LLP; and Michael S. Levine, Kevin V. Small, Harry L. Manion III and Christopher Cunio of Hunton Andrews Kurth LLP.

The Treasure Island Las Vegas COVID-19 Insurance Lawsuit is Treasure Island LLC v. Affiliated FM Insurance Company, Case No. 2:20-cv-00965-JCM-EJY, in the U.S. District Court for the District of Nevada.