Tribal casino operators in Oklahoma, Chickasaw Nation and Choctaw Nation, have filed separate lawsuits against a group of insurance companies, asking the court ruling the financial losses they experience due to the temporary closures of casinos are covered by the business interruption insurance policies they have.

All-Risk Insurance Policy Does Not Cover Pandemics

The Choctaw Nation filed in Bryan County District Court and the Chickasaw Nation sued in Pontotoc County District Court against several underwriters at Lloyd’s syndicates, among which Lexington Insurance Company, Liberty Mutual Fire Insurance Company, Evanston Insurance Company and Arch Specialty Insurance Company, even though they have not received official denial from the insurers yet. Such denials have already taken place in Louisiana and other places, on the grounds that there has been no physical damage to property.

As insurers across the states are expecting a barrage of claims to cover the financial losses from coronavirus mitigation measures impact regarding closed casinos, some gaming operators express concerns many of these claims will be turned down as the policies do not expressly cover “pandemics”.

Is There Physical Damage to Property?

The two plaintiffs that, together with the Cherokee Nation, took legal action in December against State Gov. Kevin Stitt for failing to extend their state compacts from January 1, 2020, claim their “all-risk” benefits policies cover “business interruption, interruption by civil authority, limitations of ingress and egress, and extra expense”.

Michael Burrage of Whitten Burrage, the Oklahoma City law firm the nations hired explained that they now simply seek declaratory judgements that the costs incurred due to the coronavirus spread-containing measures that have led to temporary facility closures are covered losses.

“As a direct result of this pandemic and infection, the nation’s property has been damaged, as described above, and cannot be used for its intended purpose,”

Chickasaw Nation Complaint

Business Interruption By Civil Authority

In addition, there are insurance policy provisions that cover business interruptions by civil authority, in this case the emergency order for non-essential businesses to close, as well as the one from the Centers for Disease Control /CDC/, the lawyer representing both nations points out.

Both tribes closed down their gaming facilities as they considered people’s health and safety as the nation’s “top priority”. As Choctaw Chief Gary Batton outlined, the nation’s decision was based on the latest information from local, state and federal health officials, while Chickasaw Nation Governor Bill Anoatubby pointed out closure was ordered after receiving updated guidance from CDC and Prevention.

The Choctaw and Chickasaw casinos in the state have been closed since March 16, for a period of two weeks, during which the nations will continue to pay wages to its employees.