DURANGO, Colo. —Durango & Silverton Narrow Gauge Railroad is suing its insurance company over damage caused by a 2018 wildfire and subsequent floods and mudslides in the burn area, saying the insurance company should have paid for damages from the fire and flooding as separate incidents. The insurance company disagrees, saying the fire led to the flooding, and it therefore qualifies as one event.
Some $25 million rides on who is determined to be right.
The Durango Herald reports that the railroad’s parent company, American Heritage Railways, has filed suit in U.S. District Court over damage from the 416 Fire that started in June of 2018 and flooding and mudslide damage that occurred in September of that year.
The railroad says its policy with Steadfast Insurance means the company should have paid the maximum $25 million for damage from the fire, and another $25 million for the later flooding and mudslide damage, up to the policy aggregate of $50 million. Steadfast says the fire, flooding, and mudslides were one event, and it therefore should pay only $25 million.
The railroad is seeking compensatory damages of twice the amount of the denied coverage, on the basis it was “unreasonably denied or delayed.”
Investigations concluded the fire was caused by cinders from a Durango & Silverton train. The railroad eventually agreed to pay $20 million to settle a suit by the federal government over firefighting costs, settled a group of civil suits, and agreed to major operational changes [see “Durango & Silverton settles lawsuits …” Trains News Wire, March 22, 2022]
— Updated at 8:45 a.m. CDT with additional background on fire.
Heritage should’ve quietly clearcut and scrapped the whole thing overnight, without notice, when the Federal lawsuit was filed. Just as there’s no cure for stupidity, there’s no return from extinction.
I have seen enough fire damaged forests without subsequent mudslides to know that one does not always preclude the other.
You have to love insurance agreements that cover “Act of God” claims until God acts 3 times in 1 year. Then all of a sudden it isn’t God involved.
Insurance companies are in business not to pay claims. They only give you peace of mind that you have a policy, not that you can claim a benefit.
aren’t insurance companies wonderful? They are the only business whose model involves withholding the product you have paid for.