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Caesars Sues Insurance Carriers for $2B+ in Coronavirus Losses
By Jeff Osienya Mar 25, 2021 IndustryCaesars Entertainment Inc. joins the string of companies that have recently been suing their insurance providers for damages and losses brought by the COVID-19 pandemic. The gaming company is hoping to recover over $2 billion in the lawsuit.US gambling industry giant, Caesars Entertainment Inc. has sued over 36 different property insurance carriers for declining to cover its COVID-1 losses and setbacks that are said to be worth more than $2 billion. In the 80-page lawsuit, the casino and hotel company alleged that the insurance coverage it had procured from the defendants was to shield itself against “all risk of physical loss or damage” and any other resulting interruptions of its business operations.
Caesars Entertainment filed the lawsuit on Friday, 19th February in the Eighth Judicial District Court of Clark County, Nevada, indicating that the insurance policies it purchased do not exclude damage or losses that may be incurred by a pandemic or virus. The company which completed a multi-billion-dollar merger with Reno-based Eldorado Resorts Inc. last year suffered a hefty $1.76 billion loss for the 2020 calendar year.
Further, the casino operator disclosed that it parted with over $25 million in premiums last year to buy all-risk insurance policies from the carriers who in turn were to provide coverage limits of an estimated $3.4 billion. Additionally, over the last 6 years, Caesars claims to have paid more than $135 million in insurance premiums. However, even with the payment of premiums, Caesars alleges that the insurers haven’t paid out a single penny.
Some of the insurance carriers that Caesars named in the lawsuit include Everest Indemnity Insurance Co., Hallmark Specialty Insurance Co., Evanston Insurance Co., ACE American Insurance Co., and London-based Lloyd’s. The gambling industry bigwig has also included the insurance units operating under AXA, Chubb, Great American, and Liberty Mutual in the litigation.
Caesars: The Coronavirus Pandemic Caused Physical Damage to its Properties
After its merger of the century last year, Caesars Entertainment Inc became the largest gaming company in the USA, and one of the largest globally. The brand now owns and operates 35 properties in different parts of the world and operates nearly three dozen others under a lease or management agreement. Part of its property portfolio also includes seven golf courses that currently operate under different brands.
In the claim, Caesars says that it has suffered property damage after more than 2,600 of its staffers and patrons who were in the insured properties contracted the novel COVID-19 virus. The gaming company continues by saying that Coronavirus spread in the properties via airborne droplets which attached themselves to the surfaces of its properties. Part of the lawsuit states that;
Quote"The harms to Caesars include, without limitation, physical loss and/or damage to property that was adversely altered by SARS-CoV-2 and/or COVID-19 or that was rendered unreasonably dangerous and/or unfit for its intended purpose; substantial business interruption losses due to partial or complete closures and government-ordered suspensions of business activities due to the actual and/or the threatened presence of SARS-CoV-2 and/or COVID-19; millions of dollars in extra expenses, logistical costs and expediting costs to safely resume or continue business operations; substantial claims preparation costs; and other losses incurred across numerous properties throughout the country,"
Caesars also seeks compensation for the monies it has spent to pay the workforce who went on sick leave after contracting the virus at work. The company’s suit says;
Quote“During the pandemic, Caesars has paid approximately 15,000 employees COVID-19 sick pay because they either tested positive for COVID-19 or were forced to quarantine because they came in contact with an infected individual…”
Per the lawsuit, the company’s 65,000 gaming machines, 47,000 hotel rooms, and 3,400 table games that were shut down between March and June last year on government orders, all fall under the all-risk insurance policies it has been paying premiums for. Caesars claims that it used to serve over 110,000 guests every day across its properties but after the pandemic, its properties ended up losing their primary use of running the business. Thus, the way Caesars sees it, that effectively constitutes a “direct physical loss or damage to property” which is therefore covered under the insurance policies it has been paying premiums for.
The Odds Don’t Favor the Casino & Resort Operator on this One
Its arguments aside, Caesars Entertainment Inc. is also basing the strength of its lawsuit on the premise that its insurance carriers updated their 2021 fine print with a "communicable Disease/Pandemic exclusion" to disqualify any claims linked to all virus connected losses. The casino and hotel operator’s legal team sees this as confirmation that the insurance policies of 2020 and preceding years cover virus and pandemic-related damages and losses.
As confident as the gaming leviathan may be with its suit, industry analysts see the lawsuit as a long shot. A lot of businesses have for the past few months been trying to recover their pandemic losses through insurance claims but from a legal standpoint, insurance companies have been winning the cases. According to a coronavirus lawsuits tracker by the University of Pennsylvania Carey Law School, 80% of the rulings from more than 200 lawsuits involving businesses suing their insurance carriers for pandemic-induced losses have favored insurance companies.
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