Casino Gambles on Coronavirus Business Interruption Lawsuit Against Lloyd’s, AIG, XL

A Native American tribe on Tuesday sued a group of insurance companies, asking a court to declare that losses it is incurring from shutting down its casinos during the coronavirus pandemic are covered by insurance.

Among the defendants named in the lawsuit filed by the Chickasaw Nation in Oklahoma state court are several underwriters for insurance marketplace Lloyd’s of London, a unit of American International Group Inc. and XL Insurance America, now part of AXA SA.

Representatives for Lloyd’s, XL Insurance and AIG declined comment.

The Chickasaw Nation and other Oklahoma tribes have temporarily shuttered their casinos in order to curb the spread of the coronavirus.

The Native American gaming industry on March 17 requested $18 billion in federal aid as it shut casinos that are the sole source of commercial revenue for dozens of tribes in a bid to slow the spread of the disease.

The Chickasaw Nation closed its casinos because its property has been damaged due to the coronavirus pandemic and “cannot be used for its intended purpose,” the tribe said in a court document.

Recommendations by the U.S. Centers for Disease Control and Prevention to curb the spread of the coronavirus and restrictions across Oklahoma that limit restaurants to take-out service are some of the difficulties at play, said Michael Burrage, the tribe’s lawyer.

“Practically, you couldn’t have a casino operating because of all of these issues,” Burrage said.

The Chickasaw tribe said it has an “all risk” insurance policy covering business interruptions, according to the lawsuit.

Many business interruption policies exclude coverage for pandemics and require physical damage to occur on the site. Others can be ambiguous, leading to possible coverage, legal experts said.

It was not immediately clear if the tribe’s insurance excludes pandemics, and its lawyer did not immediately respond to a request to clarify the issue.

The Chickasaw lawsuit is the second in more than a week in which a business has asked a court to declare that the coronavirus is a type of “direct physical loss or damage” that would require insurers to pay for lost revenue.

Lawyers for insurers and policyholders anticipate a wave of litigation over whether various insurance policies for “business interruption” will cover losses from coronavirus-related shutdowns.

On March 16, the owners of New Orleans restaurant Oceana Grill sued Lloyd’s and officials in Louisiana, asking a state court to declare that the coronavirus, whether inside or outside the restaurant, is a type of “direct physical damage” that would require insurers to pay.

(Reporting by Suzanne Barlyn; Editing by Noeleen Walder and Leslie Adler)