The insurance brokers’ mistakes resulted in Sea to Sky’s nacelle not being fully covered when the cable was cut

The company that operates the Sea to Sky gondola in Squamish, BC, has filed a lawsuit against its former insurance broker when a vandalism – or vandals – cut the steel gondola cable in 2019.

The company that operates the Sea to Sky gondola in Squamish, BC, has filed a lawsuit against its former insurance broker when a vandalism – or vandals – cut the steel gondola cable in 2019. The gondola company claimed Marsh and McLennan Holdings had not created an insurance policy that year with comprehensive business interruption insurance covering its losses from the closure, with the remaining costs to be covered out of pocket. « [The company] has been and is only partially compensated, » states the B.C. Supreme Court on Dec. 7, 2020. The 39-car gondola takes passengers from their base near the ocean to the Sky Highway to a lookout point on a towering cliff nearly a mile above Howe Sound. The thick steel cable was cut in the middle of the night on August 10, 2019, causing the cars to crash onto the mountainside. Owners said at the time the vandalism would cost the nacelle company between $ 5 million and $ 10 million, including replacement cabins, a new cable, and lost business. In September 2020 the attraction was closed again after someone cut the cable a second time. RCMP said no one was charged in connection with any of the incidents. The company wanted to be overinsured, litigation claims In its lawsuit, Sea to Sky Gondola said it had a « low risk tolerance » and wanted the company, if anything, to be overinsured. Instead, it alleges that Marsh and McLellan’s brokers drafted business interruption coverage in 2019 based on years of financial information that did not reflect the profitability of the business. Business interruption insurance is designed to cover loss of income suffered by a company following physical losses, fires or natural disasters, z. B. Profits That Would Have Been Made Based On Past Fi Financial Information. Neither the broker nor the agents named in the lawsuit have submitted responses to the claim report. The lawsuit also accuses the same brokers of negligence when it came time to renew the insurance in January 2020 as the nacelle prepared to reopen. The claim said the brokers allegedly notified the company that they would not renew coverage before the end of this month and allegedly forced Gondola to receive two short-term insurance extensions at a time for a few days until they found a solution. « The second policy extension has expired without the policy being further renewed or expanded, » said the nacelle’s claim. « As a result, [Sea to Sky Gondola] had to renew the policy on unfavorable terms, while new property insurance was taken out for the Sea to Sky Gondola for the remainder of 2020. » The company eventually found a new insurer. It was insured when the cable was cut for the second time last fall. The lawsuit stated that insurance brokers should have known that 2019 coverage was compiled with « outdated financial information and outdated estimates and projections » and that brokers were required to ensure that 2020 insurance was extended appropriately. The company is demanding unspecified compensation for alleged negligence, breach of contract, breach of fiduciary duty and negligent misrepresentation.

The company that operates the Sea to Sky gondola in Squamish, BC, has filed a lawsuit against its former insurance broker when a vandalism – or vandals – cut the steel gondola cable in 2019.

The nacelle company claimed Marsh and McLennan Holdings did not issue an insurance policy with comprehensive business interruption coverage this year.

The alleged negligence meant the company was only covered for 70 percent of its losses from the closure and the remaining costs were met out of pocket.

« [The company] has been and is only partially compensated, » states the B.C. Supreme Court on December 7, 2020.

The 39-car gondola takes passengers from its base near the ocean to the Sky Highway to a lookout point on a towering cliff nearly a mile above Howe Sound. The thick steel cable was cut in the middle of the night on August 10, 2019, causing the cars to crash onto the mountainside.

Owners said at the time the vandalism would cost the nacelle company between $ 5 million and $ 10 million, including replacement cabins, a new cable, and lost business.

In September 2020 the attraction was closed again after someone cut the cable a second time. RCMP said no one was charged in connection with any of the incidents.

Company wanted to be overinsured, to assert claims

Company wanted to be overinsured, to assert claims

In its lawsuit, Sea to Sky Gondola said it had « low risk tolerance » and wanted the company to be overinsured, if at all.

Instead, Marsh and McLellan’s brokers claim they created business interruption coverage in 2019 based on years of financial information that did not reflect the profitability of the business.

Business interruption insurance is designed to cover loss of income suffered by a company following physical loss, fire or natural disaster, such as profits that would have been made based on previous financial information.

Neither the broker nor the agents named in the lawsuit have submitted responses to the claim report.

The lawsuit also accuses the same brokers of negligence when it came time to renew the insurance in January 2020 as the nacelle prepared to reopen.

The claim said the brokers allegedly notified the company that they would not renew coverage before the end of this month and allegedly forced Gondola to receive two short-term insurance extensions at a time for a few days until they found a solution.

« The second policy extension has expired without the policy being further renewed or expanded, » said the nacelle’s claim. « As a result, [Sea to Sky Gondola] had to renew the policy on unfavorable terms, while new property insurance was taken out for the Sea to Sky Gondola for the remainder of 2020. »

The company eventually found a new insurer. It was insured when the cable was cut for the second time last fall.

The lawsuit said insurance brokers should have known that 2019 coverage was being compiled with « out of date financial information and outdated estimates and projections, » and that brokers were required to ensure that 2020 insurance was extended appropriately.

The company is asserting unspecified damages for alleged negligence, breach of contract, breach of fiduciary duty and negligent misrepresentation.

The insurance brokers’ mistakes resulted in Sea to Sky’s nacelle not being fully covered when the cable was cut
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