Mining Operations Exclusion Applies, but Only to Excess Layers

The Tenth Circuit overturned the lower court’s decision that would have freed a liability insurer from covering damages allegedly caused by its insured brine well operator. Specifically, the insured was alleged to have been negligent in causing destabilization of various structures caused by an underground cavern.  This insurer issued primary and numerous excess/umbrella policies.

Initially, the insurer was not responsible for providing coverage due to an umbrella provision that excluded coverage due to damage or loss of use of property resulting from depressions in the earth caused by subsurface operations.  However, the Circuit Court found that the exclusion applied only to the umbrella policies, not the primary one.  Thus, the insurer was obligated to provide coverage at the primary level, although not at the excess level.