State investigating KSMQ tower insurance dispute

Published 5:05 am Monday, June 30, 2014

KSMQ president and CEO Eric Olson shows off the base of where the stations broadcast tower once stood to Minnesota Department of Commerce investigator Theodore Patton Friday morning. The tower fell in September 2012 during a severe storm. Eric Johnson/photodesk@austindailyherald.com

KSMQ president and CEO Eric Olson shows off the base of where the stations broadcast tower once stood to Minnesota Department of Commerce investigator Theodore Patton Friday morning. The tower fell in September 2012 during a severe storm. Eric Johnson/photodesk@austindailyherald.com

KSMQ is seeking help from the state Department of Commerce with an insurance dispute over the public television station’s broadcast tower, which fell during a severe thunderstorm almost two years ago.

A state investigator was in Austin Friday to tour the site as part of the department’s investigation into the dispute.

The very top of KSMQ's transmitter tower laid partially on the parking lot in the southwest corner of the Riverland Community College west campus in September of 2012. The tower, owned by KSMQ, fell at around midnight as powerful storms swept through the area. Herald file photo

The very top of KSMQ’s transmitter tower laid partially on the parking lot in the southwest corner of the Riverland Community College west campus in September of 2012. The tower, owned by KSMQ, fell at as powerful storms swept through the area. Herald file photo

KSMQ President and CEO Eric Olson said the station’s tower was insured through Hanover Insurance when it fell on Sept. 5, 2012. According to Olson, the wind caused the tower to fall and one of the tower’s anchors to come partially loose during the storm.

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Hanover Insurance representatives inspected the site about a week after the storm. At the time, Olson thought the insurance company would pay the $620,000 claim to help KSMQ put up a new tower.

Yet Hanover Insurance denied the claim in October 2012, according to Olson.

“I was flummoxed,” he said. “I was floored. I was absolutely shocked.”

At issue is the way the tower fell. The loose anchor was only partially removed from the ground during the storm. Olson and KSMQ charge that high-line winds caused the tower to fall and the anchor to come loose.

Yet Hanover representatives said the anchor in question was largely corroded. A Hanover spokesperson said an engineering firm’s report indicated the anchor was badly corroded for most of its length and broke off during the storm. The insurance company’s expert suggested this corrosion would have been noticeable for at least the past 10 years, according to the spokesperson.

Olson and other experts disagree. KSMQ and its experts found the corrosion would have been about two feet below the ground, which wouldn’t have been spotted during maintenance. According to Olson, it would be almost unthinkable to dig out an anchor once it’s in the ground without serious reason, and even then workers would have to take many precautions. Furthermore, workers hadn’t found any evidence of corrosion during regularly scheduled maintenance and investigations in the years prior to the tower’s collapse, Olson said.

Though KSMQ’s insurance contract doesn’t cover corrosion, Olson said a structural engineer from California and an insurance industry expert both found high-line winds were the likely cause of the tower’s collapse.

“If not for the wind, the tower would still be standing,” Olson said. “That’s what our experts say.”

Hanover’s experts said the tower, which was constructed to withstand winds up to 80 mph and gusts up to 95 mph, shouldn’t have been affected by the Sept. 4 and 5 storm unless there was a serious structural deficiency, such as corrosion.

The National Weather Service in La Crosse, Wis., reported the day after the storm that wind speeds in Austin gusted to 53 mph at the Austin Municipal Airport and as high as 74 in northwest Rochester.

KSMQ had previously submitted its experts’ findings in December 2012, including testimony from various broadcast associations that say it’s unlikely anyone would check anchors for corrosion under the ground by digging them out. Yet Hanover denied the claim once more based on its experts’ findings.

Olson and KSMQ have sought help from the state through state Rep. Jeanne Poppe and Sen. Dan Sparks, both DFL-Austin. The Department of Commerce, which regulates industry in Minnesota, assigned the case earlier this year.

The station has lost thousands of dollars in revenue for its $1.4 million annual budget because of the dispute. KSMQ rented out space on its tower to wireless companies before the collapse. One of the station’s largest clients, AT&T, has built its own tower since then and will no longer rent space from KSMQ, which is about a $50,000 per year. KSMQ has an agreement through 2017 to broadcast through towers owned by television station KTTC.

The department can’t force companies to perform a certain action, but commerce officials can decide to suspend or revoke a business’s ability to act in the state, make recommendations to the state Attorney General’s office for litigation, or levy fines against a business. A Hanover spokesperson said the insurance company is happy to work with the department in its investigation.