Filed Under:Claims, Catastrophe & Restoration

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Cruise Line Seeks Recourse from BP’s Oil Spill

More than a year has passed since the Deepwater Horizon incident, though the battles are far from over. Among them are third-party claims seeking to recover lost business revenue. From hotel operators and sport and commercial fisherman to cruise ship operators, numerous business owners are seeking compensation for losses they incurred from the April 2010 event.

No More Smooth Sailing 

For example, in United Airlines v. The Insurance Company of the State of Pennsylvania, the insured sought coverage for nation-wide losses sustained as a result of the Federal Aviation Administration (FAA) mandated suspension of the national aviation system from Sept. 11 through 14, 2001. The policy provided did not include the word “physical” in the insuring agreement; rather, it protected losses resulting from interruptions caused by damage to or destruction of the insured locations. Based on this wording, both parties agreed that United could recover losses attributable to the destruction of its ticket office in the World Trade Center (WTC). However, because the other lost earnings were caused by the FAA’s suspension of air service rather than “damage to or destruction of” a United business location, the court held that United could not pursue an additional recovery.

The insured in United Airlines also argued that if physical damage was required, then the destruction of the World Trade Center ticket counter and/or the accumulation of ash at Reagan Airport should trigger coverage. The court rejected both contentions, finding that “the amount of recovery sought ($1.2 billion) bears no relation to the actual damage suffered at the WTC insured location.” The court also found that, although ash accumulated at United’s Reagan Airport facility, it did not require United to “rebuild, repair, or replace” any property and thus did not trigger coverage.

Each of Carnival’s claims has been denied. As a result, Carnival has pursued the current litigation against all of the parties involved in drilling operations aboard the Deepwater Horizon. The suit alleges negligence against all the defendants, stating: “The fire and explosion of the Deepwater Horizon, its sinking and resulting oil spill were caused by the combined and concurrent negligence of the defendants, which renders them liable, jointly and severally, to Carnival for all their damages.”

Carnival also claims fraudulent concealment against BP, Transocean, and Halliburton Energy Services, Inc. for their alleged attempts to downplay and conceal the severity of the oil spill, as well as alleged misrepresentations about their capabilities to respond to the oil spill. Carnival seeks economic and compensatory damages, as well as punitive damages and litigation costs.

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