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A gusher of BP lawsuits

By Jay MacDonald · Bankrate.com
Tuesday, June 29, 2010
Posted: 9 am ET

BP oil clean-up operations centered around North Pass not far from Venice, La.

While the BP oil spill continues to wreck havoc in the Gulf of Mexico, a gusher of related lawsuits is flooding the U.S. judicial system.

According to Reuters, at least 243 lawsuits have been filed against BP to date as a result of the Deepwater Horizon disaster, the majority representing commercial fishermen, charter boat captains, resort operators and shippers. Among the co-defendants are BP CEO Tony Hayward, Anadarko Petroleum, Halliburton and Cameron International, the company that provided the blowout preventer.

The U.S. Judicial Panel on Multidistrict Litigation is scheduled to meet today in Boise, Idaho, to explore the best way to combine the 180 or so lawsuits on its docket so far. Cases originating in the Gulf states of Florida, Texas, Louisiana, Mississippi and Alabama as well as Georgia and Tennessee have been filed in both federal and U.S. state courts.

While most of the lawsuits seek compensation for land, personal property and environmental damage as well as negligence and personal injury, a few represent BP shareholders who are most displeased with the company’s conduct, not to mention its plunging stock price.

Although a standard homeowners insurance policy often includes a $10,000 provision for pollution cleanup, it remains unclear whether the natural crude from the BP spill will qualify as a pollutant under all home insurance policies. The National Flood Insurance Program has already announced that it will cover property damage caused by oil in flood waters as long as the high water qualifies as a “defined flood.”

Credit Suisse analysts recently estimated that BP’s legal and cleanup costs could reach as high as $37 billion.

Although BP agreed to put $20 billion into an escrow fund, most parties agree that the ultimate cost of the cleanup could far exceed that figure.

Given the magnitude of the gulf spill, do you think BP should be required to place additional billions in reserve to clean up its mess?

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