Trump Casinos Battling Insurers Over Claims

     ATLANTIC CITY, N.J. (CN) – Two Trump casinos in Atlantic City are suing their insurers over unpaid Hurricane Sandy claims, arguing in court that the casinos lost income during the storm and New Jersey residents lost out on “leisure time.”
     The complaint filed in the Atlantic County Superior Court which also claims closed roads and gasoline shortages following the October 2012, category three hurricane, hampered travel, significantly diminishing the number of visitors to both the Trump Taj Mahal Casino Resort and the Trump Plaza Hotel and Casino.
     Both gambling and entertainment emporiums are owned by Trump Entertainment Resorts Inc.
     “Sandy not only caused widespread destruction to property and popular tourist attractions within Atlantic City,” the complaint filed Oct. 29 says. “Many of plaintiffs’ customers homes were [also] significantly damaged or even destroyed, thus not only depriving them of their leisure time to visit or return to the properties, but diminishing any discretionary income they may have had.”
     Both casinos are located on the Atlantic City boardwalk, and each suffered relatively little direct structural damage during Sandy.
     After the hurricane, Bob Griffin, CEO of Trump Entertainment Resorts, said that the casinos suffered a few water leaks, broken windows, and that the “M” in one of the “Trump” signs at the Taj Mahal blew off.
     The hurricane cost Atlantic City casinos an estimated $5 million a day in lost gambling revenue, according to the Press of Atlantic City.
     On Oct. 28, 2012, the state’s gaming division suspended all 12 Atlantic City casino licenses just before the storm touched down. Several major roadways, including the Atlantic City Expressway and the Garden State Parkway, were also shut down during the hurricane. The casinos were inspected and then reopened five days later.
     The insurers retained claims management company VeriClaim to help adjust the casinos’ insurance claims. In early 2013, VeriClaim found that the casinos had no right to claim loss of income under existing insurance policies due to a clause in the policies exempting the insurers from paying claims related to mandatory civil evacuations.
     The insurers denied both the property damage and lost income portions of the casinos’ claims, arguing they fell under the policy’s weather catastrophe deductible, which is 3 percent of the total insured value at each location. The insurers estimated the deductibles at roughly $5.3 million for the Taj Mahal and $1.8 million for Trump Plaza.
     In a Sept. 2014 denial letter the insurers doubled down on their claims denial. They argued the entries and exits of the casinos were not blocked during the hurricane, and that none of the casinos lost income due to customers staying away because of property damage.
     The casinos allege the insurers are ignoring the real damage. “They refused to measure and consider any loss of income from the loss of customers caused by Superstorm Sandy, nor provide a reasonable basis for the denial of loss of income and extra expense,” the lawsuit states.
     Property insurers, which had suffered an estimated $41 billion in losses after 2005’s Hurricane Katrina, have since implemented percentage deductibles for hurricanes and other windstorms. Under these new regimes, an initial amount of property damage equal to a certain percentage of the property’s value must be paid out of the policyholder’s pocket before insurance picks up the rest.
     After Hurricane Sandy, New Jersey Commissioner of Banking and Insurance Ken Kobylowski said hurricane deductibles would not apply since the storm had been downgraded to a “post-tropical cyclone” prior to hitting the state. Windstorm deductibles were not affected by that ruling.
     The Trump entities are seeking $10.3 million in damages on claims of breach of contract, breach of implied covenant of good faith.
     Matthew Gallagher, spokesman for Lexington, declined to comment. A spokesperson for Aspen could not immediately be reached. Attorney Charles Mathis, representing the casinos, did not return calls for comment.

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