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Gulf Oil Catastrophe Insurance Coverage Claims – Update: BP Counterclaim against Transocean's Excess Insurers

August 30, 2010 Published Work
Insurance Litigation Reporter, Vol. 32, No. 14


In an article in the June 18, 2010 issue of Insurance Litigation Reporter entitled "Gulf Oil Catastrophe—Round 1 Transocean Insurers v. BP Additional Insured Claim" (Insurance Litigation Reporter, vol. 32, no. 9), we reported that Transocean's excess liability insurers (who provided $700 million excess of $50 million of coverage to Transocean under marine liability policies), filed a declaratory judgment action in federal court in Texas on May 21, 2010, challenging a notice of claim by various BP entities as additional insureds under the Transocean policies. Certain Underwriters at Lloyd's and Various Insurance Companies vs. BP Exploration & Production Inc. (and other BP entities), Civil Action No. 10-01823 (SD Tex.) The insurers acknowledged in the complaint that BP was an additional insured under the policies, but they asserted that Transocean and its insurers were not responsible for damage relating to the pollution from BP's well.

On August 6, 2010, BP, represented by Covington & Burling LLP, a leading policyholder firm, filed an answer and counterclaims. Not surprisingly, the counterclaims included as counts One and Two declaratory judgment and breach of contract assertions for coverage by BP. But what was most interesting and somewhat unexpected, was a Third count for Subrogation, Contribution, or Indemnity. That count disclosed that BP had a $300 million liability policy with National Union Fire Insurance Company of Pittsburgh, PA (an AIG entity), coverage that has not previously been generally reported. The count further reveals that National Union has tendered its full policy limits to BP and assigned its rights to contribution, indemnity or subrogation to BP. Accordingly, BP is pursuing National Union's (AIG's) claims against Transocean (and its insurers) as assignee.

As previously reported, according to the Court's docket, a status conference is scheduled for September. We will continue to keep you posted as developments unfold.

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