A horse racing track owner is suing American Home Assurance Co. to recover its allegedly “substantial” pandemic-related losses, arguing that its properties suffered physical damage that would trigger insurance coverage.
Phoenix-based TP Racing LLLP closed its Turf Paradise complex and all of its in-state betting locations in March 2020 to comply with government-issued shutdown orders meant to stem Covid-19’s spread, the company said Jan. 22 in its lawsuit.
TP Racing sued the AIG unit after being denied its insurance claim to recoup lost income and extra expenses. The policy provides up to $81.7 million in protection, the company said.
American Home “refused to pay its insured a single dollar of the Policy’s coverages for losses suffered due to the COVID-19 pandemic,” according to TP Racing’s complaint filed in the U.S. District Court for the District of Arizona.
The business interruption lawsuit is among the latest brought in the past 10 months against insurers for denied claims. Courts have largely sided with insurers, holding in many cases that the policyholder must show more than economic harm.
But a handful of judges also have found that forced business shutdowns could result in the physical loss or damage that the policyholder has to show for insurance coverage.
In its denial, American Home cited a lack of “any information suggesting direct physical loss or damage” at TP Racing’s properties, according to the complaint.
TP Racing argued that its loss was “physical.”
“The probability of illness prevents TPR’s use of its covered locations just as, on a rainy day, a crumbling and open roof from the aftermath of a tornado would make the interior space of a business unusable,” it said.
Its betting locations—run out of others’ bars and restaurants— have permanently closed or closed for weeks, TP claims. Its track reopened at limited capacity just this month, according to its website.
Before the pandemic, the track daily drew thousands of customers while its dining rooms and bars also brought in substantial revenue, it said. TP Racing said its financial losses include costs to prevent future contaminaton.
Cause of Action: Breach of contract; declaratory judgment.
Relief: Judicial finding that American Home owes TP Racing insurance coverage; unspecified monetary damages; attorneys’ fees.
Response: AIG didn’t immediately respond to a request for comment.
Attorneys: Lerner & Rowe and Saltz Mongeluzzi & Bendesky PC are representing TP Racing.
The case is TP Racing LLLP v. Am. Home Assurance Co., D. Ariz., No. 2:21-cv-00118, complaint filed 1/22/21.
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