Friday, August 5, 2016

How Good is Your Insurance Coverage?

The U.S. Government filed civil claims against a Department of Transportation (DOT) contractor and its subcontractor for fire damages to the Wichita Mountains Wildlife Refuge (Oklahoma). Those two companies just settled the allegations by agreeing to pay $1.4 million to resolve the claims.

In September 2011, employees of the subcontractor were working on a road improvement project to widen roads, berms, and extending culverts. These employees were using a chop saw to cut rebar. At the time, the fire danger was extremely high and there was a burn ban in effect which included the county where the wildlife refuge was located.

The burn ban prohibited certain activities without necessary precautions being taken. However, necessary precautions were not taken and sparks from the chop saw ignited a fire which quickly spread and burned 28,000 acres on the Refuge.

As a result of the fire, the United States suffered resource damages and incurred significant fire suppression costs. The U.S. alleged that the subcontractor employees were negligent in failing to take precautions when cutting rebar and further, did not have means available to extinguish the fire once it was started. The U.S.also blamed the prime contractor for failing to adequately supervise and monitor the work done by its subcontractor.

In reaching the settlement, the Prime and subcontractor did not admit liability - a critical aspect of the case for pursuing potential insurance recoveries of the $1.4 million. This agreement allows the parties to avoid the delay, expense, inconvenience, and uncertainty involved in ligating the case.

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