LAS VEGAS (KLAS) — Treasure Island LLC has filed a lawsuit for “breach of contract” against its insurance company claiming it was wrongfully denied coverage for losses during the COVID-19 pandemic. The resort is reporting a loss of as much as $1.1 billion due to its closure which began under Governor Steve Sisolak’s directive in mid-March.
Treasure Island is claiming that damages from the “communicable disease” should be covered under its all risk policy with Affiliated FM Insurance Co. The lawsuit was filed in federal court late last week.
According to the lawsuit:
“Despite agreeing to cover Treasure Island for all risks of physical loss or damage to property unless specifically excluded in the policy, and Treasure Island’s resulting business interruption loss, AFM refuses to show its hand and, instead, has doubled down on a calculated claims handling strategy designed to limit or altogether deny Treasure Island from the recovery it is entitled to receive under an insurance contract it has long-relied on as protection against unforeseen loss or damage and resulting loss of income.”Treasure Island LLC lawsuit
Treasure Island paid around $1 million in premiums for the policy which provided coverage from March 2019 through March 2020. The resort argues it is entitled to up to $850 million in property damage and $327 million in business losses due to COVID-19. Treasure Island filed its claim one day before the policy expired.
According to the lawsuit, a Treasure Island attorney said a letter from the insurance company stated:
“Per our discussion, it is our understanding that Treasure Island, LLC was not aware of any employees infected with the virus, nor whether the virus was present at any of the locations. We also understand that there was no physical damage or loss to Insured property at the location.”Treasure Island LLC lawsuit
The lawsuit claims that the Las Vegas property is entitled to payment because COVID-19 is a communicable disease and the cleanup of the property should be covered under the policy, but was denied by AFM who claimed contamination doesn’t cause physical damage.
Treasure Island last operated on March 17. The resort employs 2,000 workers and welcomes 7,000 guests daily, the lawsuit said,” according to the lawsuit. “Treasure Island has suffered and continues to suffer damages as a result of AFM’s breach of the Policy.”