Damage to power plant was not covered by the insurance

Rygene power plant in Grimstad is owned by Å Energi Vannkraft AS. In December 2019, the runner chamber collapsed. The costs for replacing the turbine and the runner chamber, as well as the loss of revenue, amounted to approximately NOK 77 million. The power plant had an energy insurance policy that covers "sudden and unexpected damage that occurs during the insurance period". Tryg Forsikring argued that the damage could not be considered "sudden" and rejected the claim for insurance coverage. 

The collapse was caused by water entering the back of the chamber, and ribs, screws, and other fastening equipment gradually coming loose or rusting apart. The Supreme Court established that the damage could not be detected until shortly before the collapse, and the parties agreed that the damage was "unexpected". However, the Supreme Court, like the District Court and the Court of Appeal, concluded that the damage did not meet the requirement for sudden physical damage. The collapse of the runner chamber was a continuation of the gradual deterioration over many years. The Supreme Court found that the collapse itself did not appear sudden when viewed in the light of the preceding damage development related to the chamber. One could not isolate the final — and brief — phase of the sequence of events into a separate damage event to be assessed apart from the earlier damage development. 

The Supreme Court concluded that the damage is not covered by the insurance, and dismissed the appeal against the Court of Appeal's judgment. The insurance condition "sudden and unexpected physical damage" is common in property insurance, and the ruling clarifies the interpretation and application of this condition in a case like this.

Read the judgment from the Supreme Court (PFD)

Area of law: Insurance law

Key paragraphs: 51–59, 71–72

Justices: Webster, Bergsjø, Ringnes, Falch, Hellerslia