Gearboxes, the achilles heel of BigWind. We have blogged, before, that gearbox failures are a problem in this industry, hence the warranties are short – 3-5 years. Maintenance problems can rapidly begin to creep up on a wind site, after that, and plague them until death at 10-15 years. We have even seen a situation where a school was hurt, financially, because they were unaware of this reality. Maybe if more of these situations come ‘to light’, the true costs of BigWind will become more apparent to the public and our legislators. The maintenance costs are usually hidden by this industry. Remember, the wind may be free, but converting it to electricity is EXTREMELY expensive!….
Wind energy company UpWind Solutions Inc. on Monday accused Companion Property & Casualty Insurance Co. in Oklahoma federal court of acting in bad faith by denying coverage for damaged gearboxes in turbines at a wind farm co-owned by Shell Oil Co. and Goldman Sachs Group Inc.
The complaint alleges Companion used a pre-existing damage exclusion in the policy it provided UpWind to deny coverage for gearboxes without adequately investigating the nature of the damage to turbines at the Whitewater Hill Project….
UpWind obtained $3.45 million in extended warranty contractual liability coverage from Companion for a period from 2011 to 2016, according to the complaint. The policy covered any “expenses” UpWind was contractually obligated to pay resulting from damage to the covered wind turbine equipment.
Companion’s denied coverage for claims submitted in 2013 and 2014 for repairs to two gearboxes, invoking the policy’s pre-existing damage exclusion clause, but UpWind claims the insurer failed to perform an adequate investigation to reach that determination.
“To mask its deficient claims handling, Companion complained that UpWind did not provide information regarding the gearbox claims, even though Companion stated that it had sufficient information to determine that the ‘pre-existing damage exclusion’ applied to bar coverage,” the complaint said….
“Companion undertook no meaningful investigation of the gearbox claims, and instead denied coverage to UpWind based on conflicting excuses and knowing misinterpretations of the language of the policy,” the complaint said.
The complaint asks for compensatory damages, citing the fact UpWind had to pay for the repairs to the gearboxes, in addition to punitive damages for Companion’s alleged breach of faith by intentionally misreading the exclusion clause….
“It is unfortunate that UpWind must file suit in order to vindicate its contractual rights and secure the coverage it purchased, but our client looks forward to its day in court,” Bourne said.
A representative for Companion did not immediately respond to a request for comment Wednesday….