Is a missing comma in your policy worth $750 million?

Transocean's could be on the hook for $750 million after missing a comma in this companies insurance policy.

Insurance News

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Agents, brokers and carriers all know the importance of paying attention to detail and one lapse in concentration could now cost Transocean's carriers a whopping $750 million. 

BP PLC, which has paid more than $28-billion for the 2010 Gulf of Mexico oil spill, is looking to get $750 million back over a missing comma on an insurance policy.

According to a Financial Post story, BP is hoping to convince a Texas court that a missing comma allows the energy company access to Transocean Ltd.’s insurance policies on the doomed Deepwater Horizon rig.

BP filed claims with Transocean’s carriers in 2010, seeking to tap a $50-million primary policy issued by Ranger Insurance and $700-million in excess coverage from Lloyd’s of London and other underwriters.

All dollar amounts are in U.S. funds.

The carriers asked the court overseeing the spill litigation to rule that BP wasn’t entitled to unlimited access to Transocean’s insurance.

The maneuvering over insurance coverage comes as a watershed ruling by a federal judge may push the final cost to London-based BP for the catastrophe to more than $50-billion, states the FP article, wiping out years of profits and highlighting the risks of drilling as the industry pushes into deeper waters and ice-bound Arctic fields.

BP lost its battle for coverage at a lower court, won reversal on appeal, then saw that victory erased last year as the U.S. Court of Appeals in New Orleans withdrew its original opinion. The panel sent the case to the Texas Supreme Court, which is holding oral arguments this week in Austin, to determine whether the reversal conflicts with state law.

Energy industry associations representing owners of most of the world’s drilling rigs and insurance syndicates covering global exploration are watching the case intently. They weighed in with legal arguments of their own, supporting Transocean, according to court filings.

At issue is whether BP can claim that insurance policies bought by Transocean covered the oil company for the disaster, or if the Macondo well drilling contract limited coverage.

BP argues the drilling contract skipped a needed comma, and that the omission either granted access to coverage or created ambiguity that triggered an exception. Under Texas law, FP reports, an ambiguous insurance contract would be interpreted in its favor, BP contends. (continued.)

The clause in the drilling agreement reads that BP, its subsidiaries and workers would be “named as additional insureds” in Transocean’s polices “except Workers’ Compensation for liabilities assumed by [Transocean] under the terms of this contract.”

BP contends that because there isn’t a comma after the words “workers’ compensation,” this leaves open coverage liability for oil discharged from the well. Insurers could have inserted “standard language” to restrict coverage and “cannot rewrite the policies to add those restrictions now,” BP said.

BP also argues that the drilling contract has no bearing on Transocean’s insurance policies and those policies don’t bar BP from coverage.

The Macondo blowout and the explosion that followed killed 11 workers and set off the worst offshore oil spill in U.S. history. The accident and spill led to thousands of lawsuits against BP and its partners and contractors. The lawsuits over economic losses and personal injuries have been combined before Judge Barbier.

The company had set aside $43-billion to cover all the costs of the spill, and so far has paid out more than $28-billion for response, cleanup and claims. The ultimate cost is “subject to significant uncertainty,” BP said in a July 29 regulatory filing.

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