Oroville Dam Flood Claims Filed

Concrete continues to be placed on the lower chute of the Lake Oroville flood control spillway in Butte County, California. Photo taken Aug. 7, 2017, by Dale Kolke/California Department of Water Resources.

California residents in the path of water spilled from the Oroville dam in February had until Aug. 11, six months after the incident, to file claims.

The Mercury News reported that Butte County farmer George Onyett, manager of J.E.M. Farms and Chandon Ranch, filed a $15 million claim, saying that after the flooding in February, about 25 acres of walnut trees were washed away by the Feather River. He said that 1% to 2% of the trees in his walnut orchard were lost and that his land is now “irrecoverable.”

Because of the near-collapse of the Oroville Dam in northern California, communities as far as 100 miles downstream were at risk of flooding. Problems at the dam began when its main water channel, or sluice, was damaged after a winter season of record rain and snowfall after five years of drought. Torrential rainfall caused water levels to rise so quickly that large amounts of water needed to be released to prevent the dam from rupturing and inundating the communities below.

But when the force of the cascading water created a large crater in the main spillway, use of the emergency spillway was required. This safety backup, however, also nearly failed because the dirt spillway, which had never been fortified by concrete, began to erode, increasing the risk of damage to the dam. In anticipation of a possible disaster, almost 200,000 residents living in the shadow of the dam were temporarily evacuated.

Niall McCarthy, an attorney representing the farm, said the spillway crisis was “entirely avoidable.” He pointed to waived concerns about inadequacies of the emergency spillway raised by nonprofit groups in 2005, as well as recently released reports by UC Berkeley Professor Robert Bea, of mismanagement by the state Department of Water Resources, according to the Mercury News.

“There was a certainty of failure with respect to the Oroville Dam,” McCarthy said. “The state chose to make band-aid repairs. The state failed to do its job. (This was) not caused by natural conditions, (but) by human error.”

State officials have maintained it is unclear whether the fluctuation in water releases from Oroville harmed the river and those who farm along it between the shore and major flood protection levees. They argue that some bank erosion would have occurred this year, regardless, given Northern California’s record rainy season, according to the Sacramento Bee.

A number of other business owners and individuals have also filed claims with the state Department of General Services. The Sacramento Bee reported that there were 11 claims at the beginning of July and that there are now a total of 92 claims filed by residents.

A list released by DGS showed claims totaling $1.17 billion. However, that includes a $1 billion claim filed on behalf of “all affected parties” owning land along Northern California rivers where flows were affected by sudden water releases from Oroville. That claim, filed by a Woodland lawyer named James Nolan, added that actual damage amounts aren’t yet available.

Construction efforts at the Oroville Dam spillways are underway and are focused on repairing and reconstructing the gated flood control spillway, also known as the main spillway, by Nov. 1, according to the California Department of Water Resources.

Foo Fighters Sue Lloyd’s Over Terrorism Coverage

Foo Fighters
The Foo Fighters said they are suing Lloyd’s of London for failing to reimburse them for scheduled concerts that were called off after the November terrorist attacks in Paris.
Loss adjuster Robertson Taylor is also part of the suit, which was filed on June 13 in federal court in Los Angeles.

The group canceled scheduled shows in Turin, Italy; Paris and Lyon, France; and Barcelona, after the Islamic State attacks because of threats, according to the Associated Press. Immediately following the Paris attacks, the Foo Fighters said, their website was hacked and the ISIS flag was displayed with an automatic weapon and a threat to “be prepared.”

The AP reported:

The band says in the suit that it believes it will be paid for the Paris and Lyon cancellations but alleges that Robertson Taylor advised underwriters against paying for canceled shows in Italy and Spain despite ISIS releasing a video threatening additional attacks in Europe.

The band is also suing the insurers for not paying for three canceled shows related to group leader Dave Grohl’s injured leg after a fall from a stage in Sweden last June.

Performers cancel shows for a number of reasons, but whether they are covered depends on details in their cancellation insurance policy. Terrorism is listed as a cause of loss by K&K Insurance. Other triggers include:

  • Power failure
  • Damages to leased or rented venues
  • Damage to surrounding venues or infrastructure resulting in lack of access
  • Natural catastrophe such as earthquake and flood
  • Adverse weather conditions (coverage is broader than rain insurance and there are no rain gauge requirements)
  • Non appearance of a principal speaker or entertainer
  • Inability to erect facilities at a venue
  • Disease outbreak (certain exclusions may apply)
  • Labor dispute/strike risks
  • Failure of TV broadcast
  • Any other previously unforeseen cause not excluded under the wording.

For more information about recent cases involving event cancellation, check out our recent article in Risk Management Magazine.

10 Insurance Tips for Risk Managers

NEW ORLEANS—Most companies will at one time or another face coverage issues and lawsuits. In order to identify and avoid insurance-related issues and disputes before they arise, risk managers should take advantage of proven strategies for resolving difficult claims, advised Darin McMullen, attorney with Anderson Kill, P.C. at the RIMS 2015 Annual Conference & Exhibition here.

1. The purpose of insurance is to insure.

Don’t underestimate potential future problems and think of loss prevention and risk transfer rather than loss financing, he noted. Companies need to assess the types of risks they will face and make sure their program is tailored to meet these needs. Also important, he said, is making sure policies are designed to cover the losses the company will face on a day to day basis. For example, certain types of risks are seen in manufacturing and other risks are particular to an IT vendor. Risk managers need to examine any pitfalls or shortages that may exist in their current policies and seek legal opinions well in advance of renewal. They need to look at how exclusions might be interpreted as well, McMullen said.

Joshua Gold, also an attorney with Anderson Kill, added that risk managers’ jobs are more difficult than ever, with fragmentation in insurance programs existing, since many polices are purchased for a program. These may include directors and officers, product liability and cyber insurance. “There are products out there that try to assimilate them and make sure gaps in coverage are treated,” Gold said, adding that while the fine print in policies can be overwhelming, it can be key for proper coverage, especially when dealing with multiple lines, excess layers and towers of insurance.

2. Don’t limit insurance expertise to the risk management department.

All too often, “there are still going to be thorny claims and there still are going to be disputed claims, which are unavoidable,” McMullen said. He said that building expertise elsewhere within the company is critical to taking advantage of any and all available coverage. “We get the need for everybody to work together, but now, more than ever, this is important,” he said. Coverage should not just be delegated to risk or legal and collaboration is needed. For example, IT departments need to be included when planning for cyber coverage.

3. Lawyers and risk managers can be natural allies.

While there may be friction between departments in a company, legal generally recognizes the beneficial role risk managers play, McMullen said. He added that risk managers need to put any insurance-related communications in writing and assist in the analysis of policies and claims.

4. Insurance is an essential component of corporate resources and asset conservation plans.

Risk managers should purchase coverage with the intent of safeguarding the company’s own property and employees. They also need to recognize which mechanisms actually transfer risk and which do not.

5. Think insurance after a loss occurs.

This means looking to insurance coverage following all lawsuits, claim letters, product-related issues and financial losses. Risk professionals also need to analyze other sources of insurance that could possibly cover a claim.

6. Give notice of a claim or loss as soon as possible.

When faced with a claim or loss, McMullen advised risk managers not to hesitate to notify their broker, insurers and everyone in their tower of insurance as soon as possible.

7. When you make a claim, don’t accept “no” for an answer.

There is no downside to challenging an insurer’s denial of coverage. “You owe it to your company, you owe it to your organization to explore this and push back,” McMullen said, adding that determination and persistence often mean the difference between coverage and no coverage.

8. Find out where your company’s policies are.

Locate, collect and catalogue past insurance policies. Also acquire and keep policies of all entities related to your company.

9. Don’t panic if your insurer becomes insolvent.

If this is the case, McMullen advised risk professionals to file a proof of claim as a creditor and file a claim against the state guaranty fund in one or more possible jurisdictions. He recommended that they request the next layer of insurance companies to “drop down,” and also to consider litigation options.

10. Make sure your insurance team is conflict-free.

This means the team should be untainted–risk managers need to know where loyalty lies and if an attorney is representing both sides, McMullen said. “You want a conflict-free insurance team to take on the insurance company and to fight for the coverage that you are paying for,” he concluded.