In California, insurers were able to point to a since amended law that made utilities liable for the fires that started their equipment, even without negligence found. In Texas, the law requires proof of gross negligence. And last month, the largest consumer debt target – the Electric Reliability Council of Texas (ERCOT) – received sovereign immunity from the Texas Supreme Court. In an unrelated case, the judgment left a state appeal decision open, according to which ERCOT is “a government-related regulatory authority that provides an essential public service” and therefore cannot be sued.
However, ERCOT’s liability insurer does not take any risk. Last week, the Cincinnati Insurance Company filed a lawsuit in federal court in Texas to determine that it is under no obligation to legally defend ERCOT or to make full the amounts it would have to pay for property damage or injury. ERCOT bought liability insurance from Cincinnati, but the insurer said coverage only applies to accident-related damage and that February damage from power outages was “foreseeable, expected and / or intended”.
Estimates of damage from the storm vary widely, but none are small. Karen Clark & Company, which models catastrophe claims, has predicted that insured losses from the storm will reach $ 18 billion in 20 states. But the company says more than half of the losses were in Texas, which isolated itself from neighboring grids years ago, making it impossible for unaffected providers to fill the void.
The damage was so great that freelance adjusters had to be flown in from other countries to process all claims.
“Some families couldn’t reach their insurance companies for weeks,” said Tom Formeller, a Houston stucco and exterior painter who reinvented himself as an emergency installer after the storm.
In normal times, he said, the families would have paid him up front for repairs and then waited for their insurance checks. With unemployment high due to the pandemic, some families ran out of money so Mr Formeller closed their pipes for free and told them to pay when they could.
“I had a 78-year-old woman who had been without water for nine days,” he said. The woman informed Mr.Formeller that she would be given a loan to pay him off, but he resolved the delay with her insurer and completed repairs for $ 13,000.
Even if utilities are forced to bear the cost of damage caused by the winter storm, it is not clear what steps, if any, they could take to prepare for the next one. In a recent survey of Texans conducted by the University of Houston, around half opposed the idea of winterizing the grid if it meant paying more for electricity.
Clifford Krauss contributed to the reporting.
