BP Oil Spill Insurance Claims

Once the BP oil spill is contained, individuals and businesses damaged by the catastrophe will still face a long road to recovery. Some of the issues facing victims of the Deepwater Horizon oil spill will involve the insurance arena. Knowing what those issues are now could help you prepare for the insurance battles that are sure to come.

Types of Insurance Claims

In regards to the BP oil spill, several types of insurance policies could come into play. These may include, but are not limited to:

first-party policies, including time element coverages
environmental / pollution policies
event cancellation policies
First-party property policies cover direct physical loss of or damage to covered property caused by or resulting from a covered cause of loss. Many such policies include time-element coverage for business interruption, contingent business interruption (provides coverage for lost income due to suspension of business operations), order of civil authority, ingress/egress and/or extra expense.

Some first-party policies may include additional coverages for pollutant cleanup and removal and debris removal. It is important to note that courts have ruled that removal of oil falls under “debris removal”.

It is to be expected that first-party insurers will try to fight many claims arising out of the BP oil spill. They may cite exclusions or limitations on coverage for pollution, land and water to deny claims. As to business interruption claims, there could be a dispute with an insurer as to whether a complete cessation of the business occurred.

Keep in mind, pollution exclusions may not apply to oil spills caused by certain causes of loss, such as fires and explosions. For such an exclusion to apply, it has to be known what caused the loss. At this writing, the cause of the Deepwater Horizon oil rig explosion is not yet known.

As to other types of insurance, BP oil spill victims who are fortunate enough to have environmental or pollution policies will likely have an easier road, and most experts expect few fights in this area.

Event cancellation policies are designed to compensate policyholders for losses arising out of the cancellation, interruption, or postponement of specified events. They are triggered if the cancellation, interruption, or postponement is caused by factors that are beyond the policyholder’s control. With such claims, there could be a dispute with the insurer over whether event cancellation insurance applies to a drop in attendance.

In some cases, insurance policies might provide coverage for mitigation costs, even in instances where the oil spill does not reach a property. For example, companies may purchase equipment, such as booms, in an effort to protect property from contamination. Insurers may be obligated to pay for these measures to help prevent property damage.

Protecting Yourself

There are some things individuals and businesses impacted by the BP oil spill can do to protect their rights under any insurance coverage they carry. To maximize your chances for recovery, it would be wise to consult with an attorney who specializes in insurance coverage issues.
Any business or individual who stands even a chance of being impacted by this disaster should immediately begin carefully reviewing all possible coverage to determine what might apply to the oil spill. It is also vital that you put all potential insurers on notice of a claim or of circumstances that may give rise to a claim.

Most importantly, keep in mind that seemingly small losses can quickly grow into significant claims. Don’t delay consulting with a coverage attorney and notifying your insurance company, even if you think a claim won’t amount to much, or will be denied by your insurer.