Power Plant Coverage Dispute Found to be a Covered Event

Travelers Property Casualty Company of America v. Peaker Services, Inc. (Mich. Ct. App.; July 22, 2014)

An insurer was obligated to provide coverage for the defense of a lawsuit brought by the University of Michigan concerning damage to its power plant. Specifically, the school had hired the policyholder to perform work preventing the power plant’s turbines from spinning too fast. It was alleged that they had failed to perform the work properly. The insurer claimed that the contractual-liability exclusion applied to bar coverage. The court denied, stating that the underlying allegations were based on negligence and as such, the exclusion was inapplicable. It did not matter that the underlying action was based on breach of contract as opposed to a tort suit.