Those watching the Gulf oil spill have one eye on the leaking well and the other on “heavy” oil that has reached the barrier islands off Louisiana’s coast. Whether or not BP’s “top kill” measure on Wednesday is ultimately successful, destruction from oil released for the past 36 days is imminent. Businesses or municipalities affected by NOAA’s fishing ban, damage to property, loss of business or potential port closures have much to gain by looking to their insurance policies as valuable assets especially where significant premiums have been paid to cover claims from such an event.
Selena Linde, partner and insurance coverage deputy practice leader at Dickstein Shapiro LLP in Washington, D.C., spoke to HB about how fishing companies, restaurants, hotels, event holders, cruise lines and municipalities could suffer losses due to contamination of seafood, damage to vessels or property or loss of supplies and/or customers.
While talk of a damages cap under the Oil Pollution Act of 1990 (OPA) and BP’s promise to pay claims continues, businesses and municipalities along the Gulf Coast should gather all current insurance policies and check the scope of coverage, Linde advises. Property, trade disruption, cancellation, environmental, business interruption, and directors & officers insurance policies are built to respond to much of the damage or business losses that will likely occur from the oil spill, Linde told HB.
The leak from the Deepwater Horizon rig is poised to rival a similar blowout from a well off the Mexican Gulf Coast in 1979, considered the worst accidental oil spill in the world, with almost certain ramifications for those living and doing business along the U.S. Gulf Coast.
What Costs Are Recoverable?
A “special coverages” section of a property insurance policy typically covers cleanup measures and other steps taken to preserve property. Watch a video of Linde explain what costs could be recovered through insurance.
If a business is forced to halt manufacturing operations due to inability to receive supplies, contingent business interruption coverage would allow a business or municipality to recover losses. Existing policies could help if access to property is hindered by oil covering boats or washing ashore.
Get Up To Speed
Linde will be speaking at HB’s Oil in the Gulf: Litigation & Insurance Coverage teleconference on May 26 at 2pm ET and conference June 24-25 in Atlanta. She will explain what has already occurred that could trigger civil authority coverage and what event in the past lead to the availability of this type of insurance coverage.
Both programs will discuss the facts surrounding the explosion and leak at the Deepwater Horizon rig, laws that apply to liability, cleanup efforts, claims and insurance considerations. The conference in June will provide more in-depth discussions of each area and will feature Robert F. Kennedy, Jr., as a keynote speaker.
Attendees interested in insurance matters will learn if the cost of substituting supplies or relocating events is recoverable under insurance policies and what steps need to be taken and when to maximize insurance proceeds.