Jamul Casino near San Diego has filed a lawsuit against Lexington Insurance Company, a wholly owned subsidiary of American International Group, due to Lexington’s denial of coverage for Jamul’s losses related to COVID-19.
Jamul had three active “all-risk” policies with Lexington when the casino closed during the initial outbreak of the virus. Jamul’s lawsuit, filed in the Intertribal Court of Southern California, alleges causes of action for declaratory relief, breach of contract, and breach of the implied covenant of good faith and fair dealing (i.e., bad faith). Jamul has requested a jury trial.
“Jamul believes that Lexington didn’t interpret our policy correctly and has wrongly denied coverage,” said Erica M. Pinto, Chairwoman of the Jamul Indian Village Development Corporation Board of Directors. “We have an ‘all-risk’ policy, which was intended to cover any and all risks. We believe that includes losses related to the pandemic.”
Jamul Casino remained closed for approximately two months. Jamul’s lawsuit alleges that Lexington has now wrongly required “physical” damage or destruction of property to trigger coverage under the “interruption by civil authority” provision of the policy, despite the fact that the word “physical” does not appear in this provision.
Additionally, Jamul asserts that Lexington is unreasonably relying on a “pollution exclusion” of the policy, which does not specifically exclude coverage for losses related to contagious diseases. These types of communicable-disease exclusions were included in many policies after the SARS outbreak of 2003, but there was no such language in the Jamul policy with Lexington.
Pinto added, “There are no virus or other remotely related exclusions in our policy. In fact, Lexington added language when our policy renewed this July for ‘communicable diseases,’ so clearly, they know they’re wrong, but still don’t want to compensate us for our losses.”
Jamul is seeking payment for its COVID-related losses, including business-interruption damages, cleaning and disinfection expenses, and attorney’s fees and costs.
