Atlantic City Ocean casino resort won’t get $50 million in a COVID insurance claim

The Atlantic City Ocean casino resort has been in the spotlight after its parent company lost a COVID-19 pandemic-related insurance claim. The resort’s owners were hoping to receive $50 million in insurance reimbursement for property damage during the pandemic. Based on this case, it is clear that even major players in the entertainment and recreation industry are not immune to the effects of global crises, and these lawsuits may just be the beginning of a long and complex fight for damages.

A pandemic is not a reason to seek damages

In recent years, the high level of uncertainty and economic losses caused by the COVID-19 pandemic has led to many controversial insurance cases. One such case involves the Ocean Casino Resort in Atlantic City, which lost a $50 million dollar claim from its insurance carriers.

New Jersey Supreme Court Justice Ann Patterson said Ocean Casino failed to conclusively prove that the presence of the COVID-19 virus caused physical damage and thus did not result in the need for insurance reimbursement. In her decision, Patterson noted that the company had to demonstrate direct physical damage to its property, which proved to be a difficult task.

Obviously, many casinos, including Ocean Casino, suffered during the pandemic as most users moved online. For example, according to the statistics of twinspinCA, which advertises casinos for Canadian dollars, many users from the US registered there. Players did not want to risk their health and decided to play in foreign casinos online. Thus, many land-based casinos under-earned profits, but they could not successfully prove it.

The pollution exclusion contained in collateral policies was also put at the center of the dispute. The court found that the pollution exclusion clause applied to radioactive contamination, but not to contamination by virus or pathogens, which made the company’s claim to cancel the insurance invalid.

Insurance companies are not liable for COVID-19 consequences

In recent years, a slew of insurance cases related to the COVID-19 pandemic have generated a great deal of interest from both the business and legal communities. However, the New Jersey Supreme Court’s decision is the latest victory for insurers in a series of cases involving property damage due to COVID-19.

According to Penn Law’s tracking of Covid insurance litigation, of the more than 1,000 cases brought against insurers for non-payment of business interruption policies caused by COVID-19, fewer than two dozen have been ruled in favor of the plaintiff. This indicates that insurers have prevailed in most cases, defending their position and dismissing claims.

Specifically, in the case of Ocean Casino Resort, AIG, American Guarantee, and Interstate Fire, the insurers, despite some losses, generally achieved victory, thus confirming that the virus infection did not cause physical damage and did not require property insurance. This case was further confirmation that insurers have minimal liability for losses caused by the COVID-19 pandemic.