This is a rare case where the casino loses.
ATLANTIC CITY, N.J. — The New Jersey Supreme Court ruled Wednesday that Atlantic City casinos are not entitled to business interruption insurance payments for losses during the coronavirus outbreak, saying the presence of the virus is It was determined that this does not constitute a type of “direct infection.” Such payments require “physical loss or damage.”
The lawsuit includes claims filed by Ocean Casino Resort against three companies: AIG Specialty Insurance Company, American Guaranty & Liability Insurance Company, and Interstate Fire & Casualty Company. was included. These insurance companies largely denied paying out the casinos, saying the casinos suffered no direct physical losses. or damage caused by a virus.
The casino sued and defeated the insurance company's attempt to have the case dismissed. However, this decision was reversed by the Court of Appeal.
The High Court agreed to take the case to resolve the legal question of what constitutes loss or damage.
“Based on the express terms of the insurance contract, we conclude that to indicate “direct physical loss” or “direct physical loss” of the property: . . “Damage” to property under the policy language in question (parent company AC Ocean Walk LLC) requires proof that the property was destroyed or altered in a manner that rendered it unusable or uninhabitable.” the court said in a unanimous decision.
“At best, a company could claim that it suffered a business loss because it was not allowed to use its assets as usual during the COVID-19 government-mandated business shutdown period,” the opinion said. “It's just that.”
It concluded that the casino's petition “does not support a finding that the casino is eligible for insurance coverage.”
The casino declined comment Wednesday.
The ruling is similar to others handed down in state and federal courts across the country, including a case involving a California movie theater chain in which payments were denied. A real estate company in Los Angeles. A group of hotels in Pennsylvania. New Jersey hotel group and law firm.
Ocean's lawyer, Stephen Orlovsky, said in Supreme Court arguments in September that the casino had taken several steps to respond to the virus, including installing air filtration systems and using “the industry's strongest” cleaning products. said.
But David Ross, an attorney for American Guaranty, said the policy requires there to be physical damage to the property, but no physical damage occurred at the casino. He said 14 state supreme courts have ruled that mere interruption of business operations during the pandemic does not constitute physical loss.
Ocean cited Democratic Gov. Phil Murphy's 2020 order to close casinos, as well as “concerns about the virus posing to physical surfaces and air” inside the casinos, for the closure. casino.
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