Owners of a New York sewer plant have sued the insurance company in federal court for more than $3.5 million over its denial of coverage for a wall collapse last year.
The municipal owners of the Binghamton-Johnson City Joint Sewage Treatment Plant filed suit against American Alternative Insurance Corp. in U.S. District Court in Northern New York, saying the New Jersey-based company, a unit of Munich Reinsurance America, improperly denied coverage for the collapse under its general liability policy, according to The Ithaca Journal.
On May 16, 2011, a 100-foot length of the 144-foot-long, 23-foot-tall wall at the western end of the facility fell, setting hundreds of thousands of gallons of treatment material free at the plant.
The insurance company denied coverage of the collapse in July 2011 after an engineering firm it hired said the collapse was caused by a faulty design and workmanship, areas not covered by its $90.9 million general liability policy. The sewage board, which had paid a premium of about $90,000 last year, was aware of the structural problems before the policy took effect Jan. 1, 2011, according to papers filed in the suit.
Neither Munich Re or American Alternative would comment for the report.
The suit alleges that the delay in obtaining insurance funds delayed wall repairs, which “rendered routine operations impossible for an extended period,” the newspaper said, citing court records. As a result, the sewer facility did not meet state environmental quality standards.
The sewer plant serves Binghamton, Johnson City, Binghamton University, Port Dickinson and portions of the towns of Vestal, Kirkwood, Dickinson, Union, Binghamton, Conklin, and Fenton, and several homes in the Town of Chenango connected via the Town of Union, according to the report.
N.J. insurer sued for $3.5M over New York sewer plant wall collapse via IFAwebnews .
