Article ID: 8f93da4e21ffea601a61859859a6c58fafddf3c1191ea769a25761451b37102a
Source ID: secondary:businessinsurance.com
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URL: https://www.businessinsurance.com/energy-investors-lose-effort-to-claim-earlier-defense-costs/
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Energy investors lose effort to claim earlier defense costs - Business Insurance Skip to content Register for free Search Search Log In Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Energy investors lose effort to claim earlier defense costs by Richard Sine Asbestos & Environmental , Claims Disputes , Excess and Surplus Lines AIG May 19, 2026 An American International Group unit does not have to pay nearly $3.3 million in defense costs that investors in an oil refinery and storage terminal racked up before learning that they could be covered by insurance, a state court ruled Monday. In ArcLight Capital Partners LLC and Freepoint Commodities LLC v. Lexington Insurance Co. , Delaware Superior Court Judge Paul R. Wallace ruled that Lexington Insurance did not have to cover defense costs the investors spent before notifying the surplus lines insurer of underlying pollution lawsuits. Several plaintiffs sued over pollution after the investors restarted an oil refinery and storage terminal in the U.S. Virgin Islands, eventually consolidating into a single class action in 2024. The defendants included Boston-based ArcLight Capital and other direct and indirect investors in the project. Together, the policyholders ran up nearly $3.3 million in defense costs between 2021 and 2023 before learning of the applicable policy through their lawyers and notifying Lexington. Lexington’s policy required that policyholders “give notice as soon as practicable” of a claim. The policyholders argued that Delaware law, which generally requires insurers to demonstrate prejudice, or concrete harm, from late notice before denying coverage based on a policyholder’s breach of a notice condition, should govern. Lexington countered that the law of the U.S. Virgin Islands should apply. Judge Wallace found that U.S. Virgin Islands law applied because the insured risk was located entirely in the territory and the first-named insured was domiciled there. The judge said the U.S. Virgin Islands courts were more likely to take “the majority view that an insurer isn’t liable for pre-tender costs, full stop.” ArcLight was found not to be covered by the policy at all, while other investors will be permitted to recover costs from January 2024, when they sent letters to Lexington confirming coverage. ArcLight did not immediately respond to a request for comment. 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