Insurance news isn’t working in favor of BP

insurance news Deepwater Horizon Oil Spill 2010

The oil giant has now lost its bid for the coverage of $750 million toward the Transocean spill.

The Texas Supreme Court has now made a ruling that brings devastating insurance news to BP, which has learned that the Transocean Ltd. policies for the 2010 disaster in the Gulf of Mexico will not be providing the company with the $750 million that it had been seeking from them to cover the costs of the spill.

The decision against BP directly conflicts with one that had been made last year by a U.S. appeals court.

A previous ruling from a U.S. appeals court had made insurance news headlines when it said that the carriers covering Transocean were not permitted to deny BP coverage for the liabilities resulting from the pollution that occurred in the Gulf of Mexico. At that point, BP had already racked up a bill of over $28 billion for the spill. Following its decision, however, the appeals court withdrew its ruling and asked the justices in Texas to make their own ruling on the interpretation of the insurance contracts.

The latest insurance news said that BP’s insurers would be able to deny the company payments, after all.

insurance news Deepwater Horizon Oil Spill 2010The reason that the Texas Supreme Court made this decision is that it decided that the insurance policy held by Transocean was required to be read within the context of its BP drilling contract, as the coverage and the agreement between the companies were “inextricably intertwined.” Therefore, this meant that BP would not be able to claim “an additional insured” status, due to the drilling contract’s limitations.

A statement made by the Texas Supreme Court said that “BP is not entitled to coverage under the Transocean insurance policies for damages arising from subsurface pollution because BP, not Transocean, assumed liability for such claims.”

Transocean was the owner of the Deepwater Horizon oil drilling rig located well off the coast of Louisiana. The company was on contract by BP to drill the Mocando well in the Gulf of Mexico. The insurance news began when Deepwater Horizon experienced a blowout that was followed by an explosion. Eleven workers were killed, and the spill was the worst offshore oil disaster that had occurred in the history of the United States.

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