A lawsuit has been filed against Marsh Canada, alleging that it wrongfully denied coverage for the catastrophic collapse of a grain silo in 2020.
The civil claim was filed by terminal operator Fibreco Export in BC Supreme Court. In addition to Marsh Canada, insurance broker Thomas Liu was also named as a defendant in the complaint.
In March 2018, an insurance company which would later be acquired by Marsh Canada provided Fibreco with a builder’s risk policy that would run through the testing and commissioning phase of the terminal operator’s project – which was to convert the waterfront terminal on McKeen Avenue from wood pellet exports to grain. Fibreco said in its lawsuit that the liability limit of the policy was an estimated $85.3 million.
The policy was extended several times during the span of the construction project, with the most recent end date for the policy being August 30, 2020.
Fibreco then noted in its complaint that before the August 30 deadline came up, it had requested for the insurance to be extended again until the end of October 2020. However, the company said that both Marsh and Liu had advised that “further extension of the builder’s policy was not necessary,” due to coverage available under a separate operations policy. On August 31, Marsh and Liu advised Fibreco that its builder’s policy would be transitioned to an operations policy, the complaint said.
On September 11, 2020, the first of Fibreco’s silos to be filled with grain during the commissioning process collapsed. The collapse led to the “complete destruction of the silo” as well as damage to the adjoining silo, tower and conveyor system, the lawsuit claimed.
Fibreco has accused Marsh of denying coverage for claims under both the builder’s risk policy and operations policy, which resulted in the terminal operator having to shoulder the costs for the investigation, demolition, redesign and construction of new silos.
“The representation by Marsh and Liu to Fibreco regarding coverage available under the operations policy were untrue,” the lawsuit stated, adding that Fibreco is facing damages and uninsured losses of $80 million.
North Shore News reported that Fibreco’s business operations remain suspended while corrective work on the damaged facility is ongoing.
The lawsuit comes after Fibreco sued AG Growth International – the firm that designed and built the silos – in June 2021. AGI responded to the suit by saying that Fibreco failed to maintain an “all-risk” construction insurance policy as required by their contract.
