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Costs of explosion, fire exceed utility’s liability cover

Posted On: Feb. 22, 2019 12:24 PM CST


Costs related to the deadly Sept. 13 gas explosions and fires in Massachusetts have exceeded the total liability insurance available to utility NiSource Inc., the parent company of Columbia Gas of Massachusetts.

In its 2018 financial report released on Wednesday, NiSource said its estimate of costs related to the disaster have nearly doubled to more than $1 billion and said the total figure could be higher.

NiSource said it has liability coverage for damages of around $800 million and property insurance for gas pipelines of $300 million.

“Total expenses related to the incident have exceeded the total amount of liability insurance coverage available under our policies,” the company said in the statement.

While a “substantial amount” of costs related to the Greater Lawrence incident will be covered by insurance, insurers may raise “defenses to coverage under the terms and conditions of the respective insurance policies,” the company said.

“We are not able to estimate the amount of expenses that will not be covered or exceed insurance limits, but these amounts could be material to our financial statements,” NiSource said in the statement.

The utility recorded $135 million for insurance recoveries through Dec. 31, it said. “Of this amount, $5 million was collected during 2018. We are currently unable to predict the amount and timing of additional future insurance recoveries,” the company said in the statement.

For the year ended Dec. 31, 2018, NiSource recorded about $757 million in third-party claims related to the disaster, including personal injury and property damage claims.

The company is facing a criminal investigation and numerous lawsuits following last September’s disaster.