Opinion ID: 1283075
Heading Depth: 2
Heading Rank: 1

Heading: Previous Insurance Coverage and the Settlement Agreement

Text: In 2003, PinnOak operated the Pinnacle Mine in Wyoming County, West Virginia. Various insurance companies, including Lloyd's, combined to provide property insurance to PinnOak totaling $75,000,000.00. Lloyd's explained that mining risks are large risks; thus, different insurance companies combined to spread the exposure so no insurer would be inordinately impacted by a large loss. Moreover, the insurance was broken up into layers. Each layer is a piece of the $75,000,000.00 coverage, and the layers are stacked on top of each other. Each insurer agreed to provide insurance for one layer and as soon as one layer is exhausted, the next layer would go into effect. Thus, each insurance company would only be responsible for a proportional amount of any loss incurred. Lloyd's was one of the insurers of PinnOak in August 2003 when PinnOak experienced a series of methane ignitions at its mines located in Pineville, West Virginia. In February 2004, PinnOak filed suit against Lloyd's, and other insurers, to recover insurance proceeds allegedly due under coverage policies in effect at the time of the methane ignitions. PinnOak's suit claimed that Lloyd's [2] breached insurance policies numbered AN0300335, AN0300336, AN0300337, and AN0300338, and committed bad faith in its handling of PinnOak's August 2003 loss related to the methane explosions. Various insurers settled with PinnOak in 2004 and 2005. The remaining insurers were the Lloyd's syndicates providing the upper layers of insurance coverage. On May 30, 2006, PinnOak and the relevant Lloyd's syndicates entered into a Global Settlement Agreement and Release (also referred to throughout this opinion as Settlement Agreement). The Lloyd's syndicates paid their respective shares of a $56,000,000.00 settlement to PinnOak as a result of the 2003 methane ignition loss.