Travelers Property Casualty Company is asking a federal judge to rule that it is not responsible for covering a significant $26 million dispute involving a failed energy system in Canada. The case was filed on July 23, 2025, in the U.S. District Court for the Western District of Washington. The lawsuit targets Wellons Group, Inc., which is at the center of the controversy.
The dispute stems from a contract made in 2018 between Wellons Canada and Tolko Industries, Ltd. This agreement was for the design, supply, and installation of a thermal energy system at Tolko’s facility in Alberta. Tolko claims that the system did not meet the promised performance standards. They reported issues like inconsistent operation and problems with oil degradation and plugging.
In the Canadian lawsuit, Tolko is seeking damages for breach of contract, misrepresentation, negligence, and other claims. They are asking for over $26 million, which includes payments made under the contract, liquidated damages, costs for a supplemental energy system, and compensation for lost profits and market share.
Travelers argues that the insurance policy in question does not cover the claims made by Tolko. The policy, which is a commercial general liability policy, is designed to cover bodily injury and property damage. Travelers contends that Tolko’s allegations focus on contractual performance and financial losses, which are not covered by the policy.
Additionally, Travelers points to a contractual liability exclusion in the policy. This exclusion states that the insurer does not cover damages that the insured is responsible for due to liabilities assumed in a contract. According to Travelers, Wellons Group’s involvement was limited to a Parent Guarantee, which only promised to cover up to $2 million of Wellons Canada’s obligations. They argue this does not trigger coverage under the policy.
As it stands, the case is still in its early stages. The court has not yet made a decision on whether Travelers must defend or indemnify Wellons in this matter. This dispute raises important questions for insurance professionals about the limits of coverage when large industrial contracts go awry.