Ind. Jury Says PSI Not Entitled to Insurance Recovery

A Hendricks County (Indiana) jury returned a verdict this week finding that Cinergy Corp. subsidiary PSI Energy Inc. was not entitled to any insurance recovery from its London Market Insurers for the costs incurred as a result of its pollution of several former manufactured gas plants in Indiana.

Accepting the London Market Insurers’ basis for denying the insurance
claims, the jury found that coverage was barred because PSI reportedly failed to prove that the pollution at the sites was caused by any event taking place during the effective dates of the London Market policies.

Lead counsel for the London Market Insurers, Joe Hinkhouse of Lord, Bissell & Brook in Chicago, commented that the verdict was “significant” and “a full vindication of London Market Insurers’ conduct in handling the claims.” Hinkhouse added, “The jury
also accepted London’s position that PSI expected environmental damage to result from its gas-making operations.”

London Market Insurers and PSI remain in dispute regarding insurance
coverage for pollution damages at a number of other sites.

London Market Insurers comprised certain Underwriters at Lloyd’s, London reinsured by Equitas, which was also responsible for handling the claims in dispute, and certain London Market Insurance Companies.

Before natural gas became widely available in the 1950s, gas for heating and light often was reportedly manufactured by heating or steaming coal. By-products of this process included a number of reported pollutants including coal tar, tar-water emulsions and sludges.