Arguments Begin As Ocean Casino Atlantic City Sues Insurance Carriers Over COVID-19 Insurance Claims

Written By David Danzis on September 29, 2023
image of a roulette table at ocean resort casino in atlantic city, which is suing its insurance carriers over unpaid claims from the pandemic

The New Jersey Supreme Court may decide whether an Atlantic City casino can collect millions of dollars in business interruption insurance due to financial losses stemming from the COVID-19 pandemic.

Ocean Casino Resort wants a portion of nearly $50 million worth of insurance coverage reportedly held by the casino prior to the 2020 outbreak. Three insurance carriers — AIG Specialty Insurance, American Guarantee & Liability Insurance and Interstate Fire & Casualty — are refusing to pay, arguing the Boardwalk property did not suffer any physical damages.

According to the Associated Press, the NJ Supreme Court heard oral arguments from the parties on Wednesday. The court did not issue a ruling.

Atlantic City casinos want COVID relief

Ocean sued and defeated an attempt by the insurance companies to have the case dismissed. An appellate court overturned that decision earlier this year.

Jointly owned by Luxor Capital Group and Ilitch Holdings, Ocean Casino Atlantic City is not the only AC casino to seek relief from the courts. Resorts Casino Hotel had a similar case dismissed over the summer.

The AP reported that comparable matters have been settled in state and federal courts around the country. There have been successful attempts to recoup insurance funds, including by the Snoqualmie Indian Tribe, which won its 2021 claim for its Washington state casino.

As Ocean’s representatives wrote to the court:

“This case presents a generational legal dispute that this court should resolve in order to provide needed clarity to hundreds of thousands of affected New Jersey policyholders and their insurers regarding the scope of coverage for losses arising from the pandemic.”

Nitty gritty of COVID cleaning, losses

The insurance providers contend Ocean’s policy does not apply. Specifically, the insurers say viruses are on the list of things explicitly excluded from coverage.

Since the financial impacts to the casino’s business were the result of Gov. Phil Murphy’s shutdown order and not the virus itself, nor was the actual structure itself damaged by COVID-19, the insurance carriers say they are absolved.

Attorneys for American Guarantee & Liability Insurance noted that 14 state Supreme Courts have already held that the mere interruption of business activity during the pandemic does not constitute physical losses.

Ocean countered:

“The actual and/or threatened presence of coronavirus particles at the Ocean Casino Resort rendered physical property within the premises damaged, unusable, uninhabitable, unfit for its intended function, dangerous, and unsafe.”

Ocean did receive $850,000 under a communicable diseases provision in its insurance policy.

Photo by Wayne Parry / AP Photo
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David Danzis

David Danzis is the lead writer for PlayNJ. He is a New Jersey native and honors graduate of Rutgers University. As a newspaper reporter for the New Jersey Herald and Press of Atlantic City, David earned statewide awards for his coverage of politics, government, education, sports, and business. Today, he is PlayNJ’s Atlantic City “insider” and gaming industry expert on casinos, sports betting, and online gambling. David lives in Atlantic County, NJ with his wife and two children.

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