BP Prevails in Deepwater Horizon Insurance Dispute

By Robyn Hagan Cain on March 05, 2013 | Last updated on March 21, 2019

While the legal profession clearly is not recession-proof, the Deepwater Horizon oil spill litigation has kept lawyers busy.

Lawyers are arguing civil liability, criminal liability, continuances, deposition appearances. The list just keeps going.

Last week, at least one of the many questions in the BP litigation was resolved. The Fifth Circuit Court of Appeals concluded that BP is covered by a Transocean insurance policy for up to $750 million in oil spill damages, Bloomberg reports.

Transocean Holdings owned the Deepwater Horizon, a mobile offshore drilling united that sank into the Gulf of Mexico in 2010. At the time of the incident, Deepwater was engaged in exploratory drilling at the Macondo Well under a contract with Transocean. The contract required Transocean to maintain certain minimum insurance coverage for BP's benefit.

Transocean had a $50 million policy with Ranger Insurance -- a primary liability insurer -- and $700 million in excess insurance policies.

Following the Deepwater disaster, BP notified the insurers of the accident-related losses. The insurers each filed a declaratory judgment action against BP, claiming that they didn't have to cover BP. District Judge Carl Barbier agreed with the insurers, but the Fifth Circuit reversed that decision last week.

The appellate court announced in a unanimous decision, "BP is entitled to coverage under each of Transocean's policies as an additional insured as a matter of law."

Applying Texas law, the court concluded that Transocean's umbrella insurance policy -- not the indemnity provisions of the contract between Transocean and BP -- controlled BP's coverage. Because the insurance policy did not impose meaningful limitations on BP's coverage, the insurers have to cough up the cash.

Related Resources.

Copied to clipboard