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Insurers attempt to dodge $143mn tunnelling claim

Eight international (re)insurers have asked New York's Supreme Court to rule that they are not liable for a $143mn repair bill for the world's largest tunnelling machine.

The boring machine broke down hollowing out a 3km tunnel underneath Seattle known as the Alaskan Way Viaduct.

The Washington State Department of Transportation, which commissioned the project, hired the boring machine from Hitachi Zosen to dig the tunnel, which was 18 metres high.

But construction came to a standstill on 6 December 2013 after the boring machine ran into the exterior casing of an abandoned well.

The machine was modified and began tunnelling again about a month-and-a-half later, but progress was slow and ground to a halt again on 29 January last year.

The contractors examined the machine and deduced that there was a problem with its cutterhead, after soil and grease was found in the main bearings of the device.

The insurers claimed that Hitachi had experienced problems with the seals in Japan when the machine was commissioned.

"Hitachi, using specialised equipment that it sent to the site, performed detailed measurements of the seal assembly to determine whether it had become distorted," the insurers said in a complaint filed last week (18 August).

The contractor decided to sink a shaft immediately ahead of the boring machine and then drive it into the space to inspect the damage and remove the head, which would then be winched to the surface.

The insurers, which provided a builders' risk property policy, claim that the contractors were continuing to submit claims despite there being no damage to the permanent works.

A loss adjuster contracted by the insurers found that the machine would have "eventually failed" because of flaws with its lubrication system.

The insurers have asked the court to rule that they are not liable for the loss, which is expected to total $143mn, because the policy does not cover damage caused by mechanical or electrical breakdown.

The carriers include Munich Re subsidiary Great Lakes, Zurich American Insurance Company, Starr Surplus Lines, Indian Harbour Insurance, Allianz Global & Corporate Specialty, Torus, PartnerRe and a number of Lloyd's syndicates.

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