Vegas Casino Says $1.1B Policy Covers COVID-19 Losses

By Daphne Zhang
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Law360 (June 1, 2020, 7:48 PM EDT) -- A Las Vegas casino and resort has sued its insurer, alleging that it wrongfully denied coverage for its COVID-19 pandemic losses and claiming that it should get up to $1.1 billion in reimbursement because damages from the "communicable disease" are covered under its policy.

Treasure Island LLC claimed that the presence of the novel coronavirus in its casino and resort has triggered coverage under its "all risk" policy with Affiliated FM Insurance Co in a suit filed Thursday in Nevada federal court. The resort added that the insurer specifically said in an April letter that COVID-19 is a "communicable disease," the cleanup of which is covered under its policy, but denied its claim for coverage by citing a virus contamination exclusion.

"AFM contends that COVID-19 is both a covered communicable disease and an excluded virus.  Obviously, the insurer cannot have it both ways and its attempt to do so reveals a conflict in the policy and is contrary to settled Nevada law," Michael Levine, an attorney representing Treasure Island, told Law360 on Monday. 

Treasure Island said Thursday that it paid AFM almost $1 million in premiums for a one-year business interruption policy starting in March 2019, and it is entitled to coverage up to $850 million in property damage and $327 million in business losses. The resort group filed a claim March 19, a day before its policy expired, and received the denial letter from AFM in mid-April.

Nevada Gov. Steve Sisolak declared a state of emergency March 12 and ordered all gambling establishments to close five days later. Treasure Island closed its doors March 18 in response to the order, according to the suit.

Treasure Island, which owns a 2.1-million-square-foot casino and a resort on 20 acres of land, said it has suffered a significant business loss since the statewide shutdown. The resort employs 2,000 people and hosts more than 7,000 visitors daily, it said in the complaint. The casino owner claimed that people infected with COVID-19 were present at its property prior to its shutdown March 18.

"AFM failed to conduct any investigation with respect to Treasure Island's claim to determine whether Treasure Island had in fact sustained physical loss or damage as a result of communicable disease," the resort argued in the complaint.

Treasure Island said AFM called the company's general counsel, Brad Anthony, in early April asking if any employees had tested positive for COVID-19, and Anthony did not disclose the information citing privacy concerns. AFM then sent a " mischaracterized" letter "incorrectly" stating that the resort "was not aware of any employees infected with the virus, nor whether the virus was present at any of the locations" and that there was no physical damage at Treasure Island, according to the suit.

In the complaint, Treasure Island claims that its policy specifically provides coverage for cleanup and removal costs of communicable disease from its property, and AMF acknowledges that communicable disease physically damages property. The letter from AFM after the call said "COVID-19 meets the definition of a communicable disease under the policy," according to the complaint.

However, the insurer sent another letter to deny coverage in mid-April, indicating that the novel coronavirus did not cause any physical damage and the policy's contamination exclusion bars coverage for communicable disease.

Treasure Island added that the novel coronavirus can create physical damage, pointing to a statement from Sisolak on April 29 that 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." AFM has also ignored its statements that civil authority closure has created direct physical damage and revenue loss to its casino and resort as well, Treasure Island said in the suit.

The resort is asking the federal court to hold that its policies with AFM should cover COVID-19 related losses, and is demanding damages of more than $75,000 to be determined in jury trial, and attorney fees.

AFM did not immediately respond to calls and email requests for comment on Monday.

Counsel information for AMF could not immediately be determined.

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

The case is Treasure Island, LLC v. Affiliated FM Insurance Company, case number 2:20-cv-00965, in the U.S. District Court for the District of Nevada.

--Editing by Kelly Duncan.

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Case Information

Case Title

Treasure Island, LLC v. Affiliated FM Insurance Company

Case Number




Nature of Suit



James C. Mahan

Date Filed

May 28, 2020

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