Insurers Mandated to Fulfill Obligations Post Mine Collapse

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Insurance companies have been directed to complete their responsibilities in restoring a critical piece of mine equipment that collapsed following initial repairs. This ruling comes after a legal contention over their payout duties.

Insurance providers Vero, QBE, and Singapore’s Star International Insurance contended that they were not accountable for the failure of a radial coal stacker during post-repair tests. The initial damage was covered under the industrial special risks (ISR) policy, held by Baralaba Coal Company.

The policy had expired by the time the final repair claim was made by the Queensland mine. However, the Federal Court determined that the insurers were still liable as the equipment had not been fully operational when the second failure occurred.

Justice Sarah Derrington, who presided over the case, stated in her ruling, “The additional damage sustained to the stacker after the insurance period concluded is irrelevant. The insurers’ duty to cover the reparation costs took effect during the policy period. Since the stacker was not restored to its pre-damaged state before the second collapse, the obligation persisted.”

The radial coal stacker initially suffered damage in March 2019, a month before the ISR policy expired. The insurers funded the initial repairs by September of that year. The equipment collapsed again in October during performance tests to verify the repairs.

Insurers argued that by October 27, 2019, the stacker was “substantially reinstated,” and the policy had lapsed by then. Therefore, they claimed that they were not required to cover the costs for the damages from the collapse.

In her decision, Justice Derrington refuted this viewpoint.

The insurers also pointed out that Baralaba Coal Company had signed a “form of release” related to the initial payout in June 2020, which they interpreted as absolving them from any subsequent liability from the storm and the collapse.

Justice Derrington countered, stating, “The context surrounding the creation and signing of the document indicates it was meant to settle the amount payable related to the storm damage from March 12, 2019. There’s no reason to believe it also covered the October 27, 2019, collapse.”

The court ruled that the insurers must cover the additional damages and the mine’s legal expenses. For a detailed understanding, you can access the ruling here.

Original article source: Insurance News Magazine.

Published:Tuesday, 25th Jun 2024
Source: Paige Estritori

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