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State Supreme Court rules insurance companies off the hook for SR 99 tunnel construction delays

The Washington State Supreme Court ruled Thursday that insurance companies will not have to reimburse the state for the two years that the then-broken Bertha boring machine restricted drivers from using the State Route 99 tunnel in Seattle.

Justices unanimously rejected the state’s argument that delays in the tunnel project constituted a physical loss or damage that triggered insurance coverage.

Residents of Washington state funded the SR 99 tunnel project largely through gas taxes. The ruling has no immediate impact on taxpayers though, since the state won another jury trial where tunnel contractors sought millions of dollars.

The Bertha tunnel drill overheated on Dec. 6, 2013, setting off a repair effort of more than two years. The drill resumed digging in 2016, and the tunnel finally opened to traffic in early February 2019.

The Seattle Tunnel Partners construction team blamed the damage on a vertical steel pipe that had been installed in the ground years earlier. STP, which was under contract for $1.35 billion, filed claims against the state for $600 million in additional pay, but a Thurston County Superior Court jury sided with the state.

Eight different insurance companies have refused to foot the bill, claiming that Bertha’s rotating cutter head was flawed from the project’s outset, which Bertha’s maker denied.

According to the insurance policy, damages or losses caused by Bertha’s “own explosion, mechanical or electrical breakdown, failure breakage or derangement,” are not covered.

Supreme Court justices ruled that Bertha’s alleged design defects were “an internal cause” of damage not covered by insurers.

Justices also denied a claim by the Washington State Department of Transportation that the construction delays counted as insured damage.

According to the ruling, “the deprivation, dispossession, or injury must be physical. This means the loss must have a material existence, be tangible, or be perceptible by the senses.” Because the tunnel had not yet been finished, it did not qualify for insurance coverage.