Major energy company TransCanada Corp. has won a $77 million dispute with several insurers over the unpaid business interruption and property coverage for its New York power plant unit that went out of service in 2008.
On March 2, New York State Supreme Court Judge Barbara Jaffe ruled in favour of TransCanada Energy USA which is seeking coverage for $9.3 million in property damage and $67.7 million in business interruption losses for its New York power plant unit that was shut down for eight months.
TransCanada stopped the operations of a unit in its New York Ravenswood electric generating plant due to excessive vibrations in September 2008, according to a report by
Business Insurance. The unit was decommissioned until May 2009 after a crack was discovered in the generator’s rotor.
In July 2010, TransCanada filed a suit seeking the $77-million coverage from its insurers, which also lodged a case a month before asking to void the coverage.
The energy company argued that the power plant breakdown was covered because it had all-risks coverage, while the insurers contend that the policy period started after the generator rotor crack developed.
Jaffe ruled against the insurers, saying TransCanada established “that the policy covers its loss and damages” for the unit's breakdown.
“It is irrelevant that the crack formed before the policy period,” Jaffe wrote in the ruling, as quoted by
Business Insurance.
“There is no merit to the insurers' argument that the crack caused no damage,” Jaffe said. “Even if the crack required repair before them, it caused no damage until Sept. 12.”
Insurers named in the suit are Ace INA Holdings Inc.,
Arch Insurance Co., and Factory Mutual Insurance Co. Also listed in the case is
AIG, though it is no longer a party in the dispute after paying an undisclosed settlement amount.
AIG’s National Union Fire unit provided property and combined business interruption coverage to TransCanada from August 2008 to June 2009.
