From Insurance Journal comes more unsurprising news:
Pinnacle Entertainment Inc. announced that, on August 1, 2006, it filed suit in the U.S. District Court for the District of Nevada against three of its excess insurance carriers. The suit relates to the loss incurred by Pinnacle as a result of Hurricane Katrina at its Casino Magic property in Biloxi, Miss. Collectively, the three insurers provide $300 million of coverage, in excess of $100 million of coverage provided to Pinnacle by other insurers. In total, Pinnacle’s policies applicable to the Hurricane Katrina loss provide an aggregate of up to $400 million of coverage for loss caused by a weather catastrophe occurrence (as defined by the policies) and up to $100 million of inclusive coverage for loss caused by a flood occurrence. The three insurers are Allianz Global Risks US Insurance Company, Arch Specialty Insurance Company and RSUI Indemnity Company.
The suit alleges, among other things, that the defendants have improperly asserted that Pinnacle’s losses were due to a flood occurrence as opposed to a weather catastrophe occurrence; that, after the close of the proposed sale of certain Casino Magic Biloxi assets to Harrah’s Entertainment Inc., Pinnacle is not covered for any continued business interruption loss at Casino Magic Biloxi incurred after that sale; and that Pinnacle is not entitled to designate its St. Louis County project as a replacement for Casino Magic Biloxi.
While Scruggs is fighting the battle on the individual consumer side of the Katrina insurance story, we should be starting to see several interesting commercial property disputes making their way into the courts. The complexities of several of these cases is just entertainingly fascinating.
For example, in this case, the press release makes reference to “weather catastrophe occurrence”, language that I think is most common on coverage written by Lloyds syndicates. Excess property writers in the U.S. tend to issue their policies on a “following forms” basis (i.e., “we agree to be bound by the same terms as the primary insurer”) subject to customized exclusions.such as a flood exclusion. There would appear to be a difference of opinion as to whether the “weather catastrophe occurrence” clause or the flood exclusion takes precedence.
Throw in how the post-Katrina deals interact with business interruption coverage, and you have one fascinating set of issues to consider.