Adjunct Law Prof Blog

Editor: Mitchell H. Rubinstein
New York Law School

Monday, May 31, 2010

Do You Know Why BP Is Willing To Pay All Legitimate Claims? I Do.

BP has established a claims process and has repeatedly indicated in the news media that it will pay "all legitimate claims". Putting aside for the moment what a legitimate claim is, why would a company voluntarily offer to pay millions in damages? In fact, the damages may be so high that the stability of the company may be threatened. I believe that there are one or two reasons for this. First, the government may have indicated that it will assume payments after the damages reach a certain level. Second, and more likely, BP probably has insurance and it is the insurance carrier who will foot the bill. However, this bill may be even too large for the insurance carrier.

I have no inside information about any of this. However, I am surprised that I have not seen any discussion of this in the media. Perhaps this posting will help generate that discussion.

Mitchell H. Rubinstein

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