The insurer for electricity seller Electricity Maine says it doesn’t have to pay for the company to defend a class-action lawsuit, and it wants a judge to agree.
Zurich American Insurance Co. has sued Electricity Maine in federal court, where it hopes a judge will clarify whether the insurer has any obligation to cover the company’s costs or damages that may come from the class-action suit.
Electricity Maine fired back, claiming the opposite, and arguing the insurance policy it had from 2011 to 2012 should cover its costs and potential losses.
Zurich alleges the lawsuit brought by Electricity Maine customers does not fall within the terms of a policy Electricity Maine had from 2011 to 2012 with Assurance Co. of America. Zurich eventually acquired the policy through mergers.
In November, two former customers sued Electricity Maine and claimed thousands were lured by false advertising into electricity contracts to power their homes. The lawsuit alleges Electricity Maine cost those customers at least $35 million in total.
Those customers have also argued that Zurich is legally required to defend Electricity Maine in the case.
In the insurance dispute, the parties agreed to dismiss Electricity Maine’s current owner, the Houston-based Spark HoldCo, as the company was not connected to Electricity Maine during the time the policy was active.
Spark also wants out of the class-action suit, arguing that the claims refer to a period before Spark had anything to do with the Maine company. A judge has not yet ruled on whether to dismiss customers’ claims against Spark.
The potential class-action lawsuit followed an investigation by the Bangor Daily News that found electricity sellers such as Electricity Maine charged residential customers about $50 million more than the standard electricity rate, from 2012 to 2015. Lawmakers passed new restrictions on those companies into law earlier this year.