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Skiers take some final laps during night skiing Saturday, March 14, 2020, at Steamboat Resort in Steamboat Springs. The resort's parent company Alterra Mountain Co. announced just hours earlier that they would close for a week starting March 15. The announcement came about 30 minutes after Vail Resorts announced they would also be closing its ski areas. (Matt Stensland, Special to The Colorado Sun)

When viruses shut down ski operations at Canadian Mountain Holidays and Ontario’s Blue Mountain Resort in 2015 and 2018, Lexington Insurance Co. paid the resort owners $200,000 in business interruption claims. 

But when the coronavirus pandemic shut down the two ski operations in March 2020 — and more than a dozen others owned by Denver-based Alterra Mountain Co. — Lexington declined to cover more than $200 million in lost business for the privately held ski area operator.

This story first appeared in The Outsider, the premium outdoor newsletter by Jason Blevins.

In it, he covers the industry from the inside out, plus the fun side of being outdoors in our beautiful state.

“The only reason Lexington handled” the COVID-19 business interruption claim differently than the previous two virus claims “was solely on the ground that the current claim is much larger that the prior claims,” reads a breach of contract lawsuit filed this week by Alterra Mountain Co. in Denver District Court seeking a jury trial to force Lexington to pay claims for $200 million in lost business stemming from the government-mandated shutdown of ski resorts across North America due to the COVID-19 pandemic. 

Alterra’s lawsuit, which cites Colorado law allowing it to collect double the covered benefit that was “unreasonably delayed or denied,” argues Lexington declined the loss-of-business claims so it could protect its bottom line. 

“The Lexington policy contains no exclusion … simply because the claim is large – and, more specifically, larger than the amount Lexington would prefer to pay to sustain its profit on the policy,” reads the lawsuit.

Alterra Mountain Co. has not discussed its 2020 losses following the state government ordered shutdown of 15 ski resorts in California, Colorado, Washington, West Virginia, Utah, Vermont and Canada in mid-March. The lawsuit filed last week pins the losses at “more than $200 million.” That amount mirrors the $203 million in lost resort earnings reported by Vail Resorts after the publicly traded resort operator closed its 34 North American ski areas on March 15, 2020. 

Alterra says its resorts have paid Lexington “millions of dollars in premiums” for “broad all-risk coverage” in case of physical losses or damage arising from many scenarios, including infectious or contagious disease that prompts a public authority to close a resort. Alterra’s lawsuit argues Lexington has denied coverage “systematically and categorically” for not just the resort operator, but all policyholders that filed pandemic-related business loss claims in North America. 

The resorts’ policies through Lexington and its parent AIG did not include a virus exclusion, which has been widely used by many insurance companies since 2006, following the SARS virus outbreak in 2003. 

“Lexington consciously chose to cover virus-related claims,” reads the lawsuit.

Lexington “confirmed its decision to cover virus-related claims,” reads the lawsuit, by paying a Canadian Mountain Holidays’ business interruption claim following an outbreak of the Norwalk virus in 2015. Similarly, the insurer paid for business losses following a 2018 Norovirus outbreak at Blue Mountain Resort. 

“Lexington and AIG established a consistent pattern of paying virus claims even in the absence of structural damage – a pattern which held until Lexington was faced with a substantially larger virus claim,” reads the lawsuit. 

Both Alterra and attorneys representing Lexington declined to comment on the lawsuit.

Jason Blevins

The Colorado Sun — Email: Twitter: @jasonblevins