Seattle Tunnel Partners v. Great Lakes Reinsurance (UK) PLC (Majority)Annotate this Case
Petitioners Washington State Department of Transportation (WSDOT) and Seattle Tunnel Partners (STP), sought reversal of a Court of Appeals decision affirming the partial summary judgment rulings that an “all risk” insurance policy did not provide coverage for certain losses. At issue in WSDOT’s petition for review was whether the loss of use or functionality of the insured property constituted “physical loss” or “physical damage” that triggered coverage. STP’s petition asked whether the insurance policy excluded coverage for damage to the insured property caused by alleged design defects and whether the policy covers delay losses. This case arose out of a major construction project to replace the Alaskan Way Viaduct in Seattle. In 2011, STP contracted with WSDOT to construct a tunnel to replace the viaduct. The project started in July 2013. A tunnel boring machine (TBM) used in the project stopped working in December 2013, and did not resume until December 2015. The project was unable to continue during the two-year period while the TBM was disassembled, removed, and repaired. STP and WSDOT tendered insurance claims under the Policy. Great Lakes denied coverage, and STP and WSDOT sued the insurers, alleging wrongful denial of their claims. The Washington Supreme Court affirmed the Court of Appeals, finding that even if it interpreted “direct physical loss or damage” to include loss of use, no coverage under Section 1 is triggered because the alleged loss of use was not caused by a physical condition impacting the insured property.