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Insurance won’t cover $80-million North Vancouver grain silo collapse, lawsuit says

Broker gave bad advice, Fibreco Export Inc. claims
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North Vancouver's Fibreo Export Terminal sits hobbled with one silo collapsed, Sept. 15. 2020. The industrial accident is now the subject of two lawsuits in B.C. Supreme Court. | Mike Wakefield, North Shore News files

The 2020 collapse of a grain silo in North Vancouver is now mired in a second lawsuit, this time with the terminal owner alleging their insurer has left them on the hook for the $80-million liability.

In a new civil claim filed in B.C. Supreme Court, Fibreco Export Inc. is suing Marsh Canada Ltd. and broker Thomas Liu.

At the time of the industrial accident, Fibreco was nearing the completion of a project to largely convert the waterfront terminal on McKeen Avenue from wood pellet exports to grain.

In March 2018, a company later acquired by Marsh Canada provided Fibreco with a builder’s risk policy that was to last right through the testing and commissioning phase of the project, the suit claims.

Fibreco says the limit of the liability under the policy was an estimated $85.3 million.

That policy was extended several times during construction, with the most recent end date for the policy being Aug. 30, 2020.

In their suit, Fibreco says they requested it be extended again until the end of October that year but “Marsh and Liu advised Fibreco further extension of the builder’s policy was not necessary” due to coverage available under an operations policy, and on Aug. 31, Marsh and Liu advised the company that their builder’s policy would be transitioned to an operations policy, the claim states.

During commissioning of the silos on Sept. 11, the first silo to be filled with grain collapsed, “causing complete destruction of the silo” as well as damage to the adjoining silo, tower and conveyor system.

The underwriters of the builder’s risk policy and operations policy have both denied coverage to Fibreco’s claim, the suit states and, as a result, Fibreco has had to take on the costs of the investigation, demolition, redesign and construction of new silos on their own.

“The representation by Marsh and Liu to Fibreco regarding coverage available under the operations policy were untrue,” the claim states.

In June 2021, Fibreco sued AG Growth International, the firm that designed and built the silos, alleging they used substandard designs. In their response to Fibreco’s suit, AGI contends Fibreco failed to maintain an “all risk” construction insurance policy, as required by their contract, court documents show.

“The ability of Fibreco to recover its losses arising from the silo failure from AGI has been prejudiced by the negligence, misrepresentations and breach of the broker agreement by Marsh and Liu,” the new claim states.

Business operations remain suspended while the remedial work is done.

According to the claim, Fibreco is facing damages and uninsured losses of $80 million.

Fibreco is asking the court to award general damages for negligence, negligent misrepresentation and breach of common law duties, plus special damages, costs from the AGI lawsuit, and any further damages that can’t be recovered from AGI.

Reached by the North Shore News, both Marsh Canada and Liu said they could not comment while the matter was still before the courts.

Neither of the suits have been heard in court yet and the allegations in them remain unproven.