XML 58 R23.htm IDEA: XBRL DOCUMENT v2.4.0.6
Insurance Matters
9 Months Ended
Sep. 30, 2012
Insurance Matters [Abstract]  
Insurance Matters [Text Block]
Note 16.  Insurance Matters

We participate as a named insured in EPCO's insurance program, which provides us with property damage, business interruption and other insurance coverage, the scope and amounts of which we believe are customary and prudent for the nature and extent of our operations.  While we believe EPCO maintains adequate insurance coverage on our behalf, insurance may not fully cover every type of damage, interruption or other loss that might occur.  If we were to incur a significant loss for which we were not fully insured, it could have a material impact on our financial position, results of operations and cash flows.  In addition, there may be timing differences between amounts we accrue related to property damage expense, amounts we are required to pay in connection with a loss and amounts we subsequently receive from insurance carriers as reimbursements.  Any event that materially interrupts the revenues generated by our consolidated operations, or other losses that require us to make material expenditures not reimbursed by insurance, could reduce our ability to pay distributions to our unitholders and, accordingly, adversely affect the market price of our common units. 

Involuntary conversions result from the loss of an asset because of some unforeseen event (e.g., destruction due to fire).  Some of these events are insurable, thus resulting in a property damage insurance recovery.  Amounts we receive from insurance carriers are net of any deductibles related to the covered event.  EPCO renewed its annual insurance programs during the second quarter of 2012.  Under terms of the renewed policies, EPCO's deductibles for property damage claims now range from $5.0 million to $60.0 million depending on the nature of the loss (windstorm or non-windstorm) and the assets involved (onshore or offshore).  We continue to maintain business interruption coverage for our onshore and offshore assets, except for those situations involving windstorm-related downtime for our offshore assets.  
 
After performing a cost-benefit analysis, management elected to forego windstorm coverage for our Gulf of Mexico offshore assets. The combination of increasingly high deductibles and premiums resulted in such coverage being uneconomic to us; therefore, we chose to self-insure such operations for the current annual policy period.  Although the new EPCO policies do not provide any windstorm coverage for offshore assets, producers affiliated with our Independence Hub and Marco Polo platforms provide physical damage windstorm coverage of $350.0 million for each of these key offshore assets.
 
During the three and nine months ended September 30, 2012, we collected $2.3 million and $30.0 million, respectively, of nonrefundable cash proceeds from insurance carriers that we recognized as a gain within operating costs and expenses.  These proceeds relate to property damage claims we made in connection with the February 2011 NGL release and fire at the West Storage location of our Mont Belvieu, Texas underground storage facility.  To the extent that additional non-refundable insurance proceeds related to this incident are received, we expect to record gains equal to such proceeds.