Resorts sue over 2006 earthquake damage
Two Big Isle resort owners are denied a $20 million claim
The owners of two Big Island luxury resorts that sustained an estimated $115 million in damage and business loss from the October 2006 earthquake are suing an insurance carrier.
In a complaint moved from state court to federal court on Dec. 17, Mauna Kea Beach Hotel Corp. and Hapuna Beach Prince Hotel Corp. alleged that Affiliated FM Insurance Co. has hampered their efforts to complete the necessary repairs and reopen by denying a $20 million claim.
In denying the claim in its entirety, Affiliated FM concluded that both hotels sustained damage and business losses of only $14.4 million. The insurance company also found that the Mauna Kea should have remained open and that the damage could be repaired without closing the hotel.
In an October correspondence, the insurance company noted it is a property insurance policy and is not required "to defend and indemnify the insured for any and all liability resulting from injury or death related to the damages sustained by the Mauna Kea," the complaint said.
Three other insurers have already tendered policy limits totaling $30 million, including the Landmark American Insurance Co., which along with Affiliated jointly retained experts to investigate the hotels' claim. The Landmark paid the hotels $20 million under its policy limits.
The two hotels were forced to shut down in December 2006 after engineers found that the damage posed a "significant hazard" to the guests and employees.
Nearly 100 guests were displaced and more than 200 employees and managers laid off at Mauna Kea.
The Mauna Kea is undergoing a $150 million renovation to reposition itself as the flagship property for Prince Resorts Hawaii hotels. The renovation will reduce the hotel rooms to 258 from 310 but add new retail shops and other amenities, including a spa and fitness center.