Judge rejects BP’s bid to use Transocean’s insurance for Gulf spill
A U.S. federal judge has ruled that BP Plc cannot use insurance coverage from Transocean Ltd. to cover costs stemming from last year’s oil spill in the Gulf of Mexico.
On April 20, 2010, an explosion on the Deepwater Horizon drilling rig, owned by Transocean, caused 11 deaths and led to a massive offshore oil spill. BP owned a majority in the Macondo well, whose blowout led to the spill.
BP had implored the U.S. court to rule that it was covered under Transocean’s insurance policies, even though the contract between the parties stipulated that BP would assume responsibility for any spill costs.
Two of the policies in question include a Ranger Insurance Limited policy with $50 million of general liability coverage and policies from various underwriters (referred to as “Excess Insurers”) providing an additional $700 million in general liability coverage.
“The Ranger and Excess Policies have materially identical terms,” wrote Louisiana Eastern District Judge Carl Barbier. “The key terms at issue are “Insured” and “Insured Contract.” “Insured” is defined as including the Named Insured, and other parties.”
Judge Barbier ruled that “because Transocean did not assume the oil pollution risks pertaining to the Deepwater Horizon Incident—BP did—Transocean was not required to name BP as an additional insured as to those risks. Because there is no insurance obligation as to those risks, BP is not an “Insured” (or “additional insured”) for those risks.”
As a result, the court rules that BP is not entitled to the declarations of coverage it seeks under Section II of the Policies. BP’s motion for judgment on the pleadings must be denied.
Judge Barbier’s court ruling can be read online. (PDF)
