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Welspun Loses Insurance Case Over Fire

1 min read

A U.S. District Court judge in Little Rock recently ruled Welspun Pipe’s insurance carrier doesn’t have to pay the pipe manufacturer $13.5 million for a loss tied to a 2012 fire at its Little Rock plant.

Here’s what happened, according to the lawsuit that Welspun filed against Liberty Mutual Fire Insurance Co. of Boston back in 2013:

A blaze in the control panel room, “which regulated several processes vital to pipe production,” resulted in work being stopped.

But Welspun had orders to fill, and not completing them would have resulted in a loss of $69 million in revenue.

So Welspun Pipes called on a sister company in India to help supply the pipes. And that resulted in about $14.5 million in mitigation expenses that were necessary to save the order.

Liberty paid Welspun $22.3 million for loss of business income and paid $1 million for what it called an “extra expense.”

But it denied that the remaining $13.5 million in mitigation expenses were covered under Welspun’s policy.

Both sides submitted filings to U.S. District Judge J. Leon Holmes for a ruling. He found that the policy didn’t cover the mitigation expenses. “The plaintiffs have failed to present any evidence that those mitigation expenses averted a net decrease in sales production,” he wrote in his 15-page order.

Holmes ruled in favor of Liberty Mutual and dismissed the case.

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