Phillips 66 Sues Berkley National Over Denied Coverage
Phillips 66 has initiated legal action against Berkley National Insurance Company, a subsidiary of W.R. Berkley Corporation, alleging breach of contract and bad faith. The lawsuit, filed on November 5, 2026, in the U.S. District Court for the Southern District of Texas, claims the insurer initially agreed to provide a defense for the energy company in two personal injury and wrongful death cases before reversing its position.
The dispute stems from a January 17, 2023, fire at the Phillips 66 Borger Refinery in Texas. The incident occurred during a snubbing operation involving lock pins and a hanger, leading to the release of hydrocarbons. Two lawsuits were subsequently filed in Harris County, Texas, by plaintiffs including Shannon Thompson and Debra Scharene Huff.
Phillips 66 asserts that it qualifies as an additional insured under energy general liability and umbrella policies Berkley National sold to subcontractors Cased Hole Wellhead Services and Universal Wellhead Services. According to the complaint, Berkley National provided written acceptance of its defense obligation in February 2025. Following this, Phillips 66 submitted legal invoices and case strategy reports to the insurer, which reportedly raised no objections.
The complaint alleges that in October 2025, nearly seven months after accepting the defense, Berkley National reversed its coverage position under both the Universal and Cased Hole policies. Phillips 66 claims that despite multiple requests for reconsideration and settlement authority throughout late 2025 and early 2026, the insurer failed to respond or fulfill its obligations. Phillips 66 eventually settled the underlying lawsuits independently, describing the agreements as reasonable and in good faith.
Beyond the defense costs, the lawsuit seeks reimbursement for $882,237.50 in property damage related to a crane leased from Scott Macon Equipment that was damaged during the fire. Additionally, the filing notes that on October 16, 2026, a court ruled that contractors Cavern Solutions and Cased Hole owed indemnification to Phillips 66 regarding the underlying lawsuits.
Phillips 66 is pursuing claims for breach of contract, violations of the Texas Prompt Payment of Claims Act, and bad faith under the Texas Insurance Code. The company is seeking damages, penalty interest, and attorneys' fees, and has requested a jury trial.
This case highlights the potential risks for insurers when reversing a previously accepted defense obligation, particularly after receiving sensitive case strategy information, and serves as a reminder for coverage professionals to monitor how courts handle allegations of bad faith when an insurer's refusal to settle potentially exposes an insured to liability exceeding policy limits.
Why it matters
The complaint highlights significant risks for insurers when reversing an accepted defense obligation, especially after receiving privileged case strategy information.
FAQ
What specific legal claims is Phillips 66 bringing against Berkley National?
Phillips 66 is alleging breach of contract, violations of the Texas Prompt Payment of Claims Act, and bad faith under the Texas Insurance Code.
When did the fire at the Borger Refinery occur?
The fire occurred on January 17, 2023.
What is the total amount Phillips 66 is seeking for crane damage?
Phillips 66 is seeking $882,237.50 for the damage to the crane leased from Scott Macon Equipment.
Source: Insurance Business America. See the original source for full details.
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