Pinnacle
in Dispute with Insurer
Pinnacle Entertainment,
left with three damaged casinos in the wake
of Hurricanes Katrina and Rita, is headed for
a dispute with one of its insurance carriers
that believes Pinnacle is entitled to less money
than the company has previously disclosed.
One of the company's insurance carriers,
Westport Indemnity Corp., has defined the hurricanes
as a "flood occurrence" instead of
a "weather catastrophe occurrence,"
which would entitle the casino company to significantly
more insurance coverage.
Westport advised Pinnacle that the company
is entitled to a maximum of $25 million annually
for flood coverage instead of $25 million "per
event," Pinnacle said in a filing with
the Securities and Exchange Commission Thursday.
Pinnacle said the damage sustained at its Boomtown
New Orleans, Casino Magic and L'Auberge du Lac
riverboat casinos were caused by a "weather
catastrophe," which entitles the company
to $400 million of insurance coverage for each
"occurrence."
A 3 percent deductible would apply to damage
sustained in a "weather catastrophe,"
whereas Westport is arguing that Pinnacle pay
a 5 percent deductible under the flood definition,
Pinnacle said in the filing.
"The company intends to vigorously oppose
any effort by any of its insurance carriers
to limit their obligations under the policies
by improperly characterizing the losses sustained
by the company," the filing said.
Pinnacle executives were unavailable to comment
on the company's filings, but a competitor's
top communications executive said the Gulf Coast's
casino operators had different types of insurance
coverage.
MGM Mirage spokesman Alan Feldman said it's
still "too early" to assess how much
insurance money the company will receive. The
company hasn't yet made a claim or formal presentation
to its insurance carriers on the damage sustained
to its Beau Rivage resort in Biloxi, Miss.
"You're going to find that everyone's
coverage is a little bit different," Feldman
said. "For some companies that had business
interruption insurance they may not have specified
what caused the interruption. Others would have
had some sort of disaster insurance for flood
or wind damage or some combination of both.
These aren't one-size-fits-all circumstances."
Mississippi's Attorney General is already suing
insurance companies to get them to pay for hurricane
damage, such as flooding, that the insurers
claim are not covered by the terms of their
policies. Part of the problem policyholders
have is that the hurricanes caused wave, flood
and wind damage.
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