A Las Vegas Strip casino has accused its insurance company of wrongfully denying its business interruption claim in the face of COVID-19.

Plaintiff Circus Circus LV, the holding company of Circus Circus Hotel and Casino, is suing AIG Specialty Insurance Co. over an alleged breach of contract, joining businesses from around the country that say their claims have been wrongfully denied.

Circus Circus says AIG refuses to stand by the casino’s insurance policy, which was intended to cover “all risks of physical loss or damage property resulting from perils not specifically excluded.”

The coronavirus lawsuit seeks a declaration that AIG has a duty to cover losses brought about by the pandemic, Insurance Journal reports.

Circus Circus’ insurance policy provides up to $500 million in coverage for physical loss or damage of property and up to $96,774,307 in coverage for loss of business income, according to 8 News Now, and has an effective term of Dec. 20, 2019, to Dec. 20, 2020. The casinos says it paid a $1.6 million premium for the policy and claims it has satisfied all conditions to be covered.

Circus Circus Hotel & Casino closed its doors on March 18, after Nevada Gov. Steve Sisolak issued a stay-at-home order and shutdown of all nonessential business in an effort to fight the spread of COVID-19. Though Las Vegas’ economy is largely rooted in the hospitality industry, casinos and resorts were considered nonessential and shut down. They did not reopen until early June.

Stay-at-home orders remain in effect in Nevada and elsewhere, the coronavirus lawsuit says, causing a “total or partial prohibition of access to Circus Circus and the necessary partial or total interruption of Circus Circus’s business operations.”

Because Circus Circus relies on materials and customers coming in from around the world, the stay-at-home orders and COVID-19 have continued to cause physical loss and damage, having a “devastating effect” on the casino’s business, the lawsuit says.

The plaintiff is aware that people infected with COVID-19 were at Circus Circus before the casino shut down, and reports that its employees took more than 1,600 sick days between Jan. 1 and March 18.

During that same period, Circus Circus said it welcomed more than 337,000 registered guests.

Sisolak has periodically issued directives, as new information becomes available regarding the coronavirus pandemic.

One such directive was issued April 29.  This directive explained the basis for the closure and stay-at-home order was the ability of COVID-19 “to survive on surfaces for indeterminate periods of time renders some property unusable and contributes to contamination, damage, and property loss…”

Circus Circus notified AIG on March 20 that the casino was experiencing an ongoing, covered loss, the lawsuit states. AIG sent Circus Circus a written denial June 19.

The casino company maintains its “all risk” coverage was triggered because COVID-19, a highly contagious disease, and the related stay-at-home orders are perils not specifically excluded under the policy. 

Circus Circus is experiencing “direct physical loss” as well as “physical damage” to its property because COVID-19 contaminates objects and surfaces, the casino company says.

According to legal news, the policy states “[i]n the event the Insured is prevented … from continuing its business operations or services and is unable … [t]o continue business operations or services … then [AIG] shall be liable … for the actual loss of income sustained during the Period of Interruption.” 

Circus Circus believes it is further covered due to Contingent Time Element, Ingress and Egress, Extra Expense and Civil Authority coverages in its policy.

In addition to a demand for jury trial, the plaintiff seeks a declaration from the Court that the policy’s coverage provisions are triggered by Circus Circus’ claim, that no policy exclusion applies to bar or limit coverage and that the policy covers the claim.

Circus Circus is also asking for “special and consequential damages” from AIG in an amount in excess of $75,000 to be determined at trial, prejudgment and postjudgment interest, attorneys’ fees and court costs, and any other relief deemed proper by the Court. 

Business interruption insurance claims are also being denied in the U.K. The Financial Conduct Authority recently brought a business interruption test case against eight insurance companies who are denying claims of businesses who closed due to COVID-19.

Have you had an insurance claim denied during the COVID-19 pandemic? Tell us about it in the comments section below.

The plaintiff 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 Circus Circus Business Interruption Insurance Lawsuit is Circus Circus LV LP v. AIG Specialty Insurance Co., Case No. 2:20-cv-01240-JAD-NJK, in the U.S. District Court for the District of Nevada.

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