NJ Casino Hits Zurich With $500K Virus Coverage Suit

By Daphne Zhang
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Law360 (May 14, 2021, 7:48 PM EDT) -- An Atlantic City casino resort has hit Zurich with a $500,000 suit in New Jersey state court, alleging the carrier breached its insurance contract by wrongfully denying and reading its claim as seeking civil authority coverage while it did not.

Resorts Casino Hotel said Thursday that Zurich American Insurance Co. failed to cover its losses related to the COVID-19 pandemic and government closure orders. The casino said its Zurich policy specifically covers economic damages and financial losses in addition to property damage.

The casino said its policy also offers a $500,000 sub-limit for necessary business suspension due to prohibited access to its property, which is exactly what it experienced when it was forced to shut down from March 2020 to July 2020 due to government closures orders.

The Atlantic City casino said in order to comply with government orders and protect its employees and customers, it locked doors and put security guards at all entrances of the resort to keep all individuals from accessing the premise. The four-month closure caused it to suffer more than $500,000 in damages, it said.

But Zurich denied coverage last June after the resorts filed a loss claim, improperly asserting that the policy's civil authority provision was not triggered while the casino was, in reality, seeking coverage under the "Tenants Prohibited Access" section, the casino said.

Resorts is alleging breach of contract, contending that Zurich refused to analyze its insurance claim in the correct provision under which it deserves coverage.

The Atlantic City casino resort's suit joins a slew of gambling giants' litigation pushing for pandemic coverage. This week Las Vegas' Circus Circus Hotel and Casino asked the Ninth Circuit to revive its COVID-19 business interruption lawsuit against AIG. In March, the owner of Motor City Casino Hotel claimed its Zurich affiliate insurer owes it $270 million for COVID-19-related losses.

Gaming industry giant Caesars Entertainment Inc. has also dragged more than 36 property insurers to Nevada state court, alleging the carriers should pay for its over $2 billion in pandemic-related losses after it gave COVID-19 sick pay to over 15,000 employees and had more than 2 million cancellations.

Mohawk Gaming Enterprises LLC, which is behind Akwesasne Mohawk Casino Resort, is fighting its insurer Affiliated FM Insurance Co. in New York federal court on the effects of a virus exclusion to its coverage. Affiliated is also defending against Treasure Island LLC's Nevada federal court suit with a contamination exclusion.

Representatives for the parties could not be immediately reached for comment Friday. 

The casino is represented by Michael J. DiPiero of Brown & Connery LLP.

Counsel information for Zurich could is not immediately available. 

The case is Resorts Casino Hotel v. Zurich American Insurance Co., case number 001550-21, in the Atlantic County Superior Court of New Jersey. 

--Editing by Gemma Horowitz.

For a reprint of this article, please contact reprints@law360.com.

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