The operators of Magic City Casino in Miami have sued four insurance companies they claim wrongfully denied coverage for “business interruption” losses due to Covid-19 closures.
Magic City said AXA XL Insurance Group, Indian Harbor Insurance, Hallmark Specialty Insurance and Ategrity Specialty Insurance sold the casino “all-risk” policies that include business-interruption losses. The lawsuit, filed in federal court in South Florida, states, “In an all-risk insurance policy, all risks of loss are covered unless that are specifically excluded.”
The lawsuit also claims the casino was closed as a result of orders issued by Governor Ron DeSantis and local officials. Court documents note the disputed policies contain identical sections about providing coverage for losses resulting from an “order of civil or military authority.”
The lawsuit reads, “As a result of the presence of Covid-19 and the closure orders, plaintiff sustained a suspension of business operations, sustained losses of business income and incurred extra expenses. Plaintiff has also sustained business income losses due to direct physical loss or physical damage at the premises of dependent properties.”
In April 24, the Insurance Information Institute said, “Global pandemic risks are uninsurable.” The group also stated, “Only a handful of business interruption policies cover communicable disease contamination. Very few U.S. businesses purchase them.”
In May, the Federal Reserve Bank of Chicago also stated business owners’ policies do not cover losses related to the pandemic. “Some business owners have fought back by filing lawsuits, while legislators in a few states have talked about passing laws to mandate pandemic coverage, potentially retroactively. The outcomes of these actions may not be known for several years but are likely to be important, because the losses from the pandemic by businesses with business interruption insurance are very large and could leave some insurers insolvent after just a few months of payments.”
