Insurers for the city of Halifax are refusing to pay for the cleanup of the large fuel leak at the Metro Transit bus depot in Burnside last year.

As much as 200,000 litres of diesel seeped out of an underground fuel line before it was detected last year. It was a spill so large, the dyed diesel poured out of the ground and was detected a kilometre away.

It took consultants another six weeks to confirm Metro Transit was the source.

The first lawsuit has now been filed in connection with the case. The city of Halifax is going after its insurers to pay the cost of the cleanup estimated at more than $2 million.

The claim was filed Friday against Zurich, Royal Sun Alliance and Arch Insurance and states the insurers have refused to pay under a special decontamination policy for the bus depot.

Lawyer for the city, Martin Ward says the two sides have different interpretations of the policy.

"It's a question of what is the extent of the coverage is," he said. "So there's a matter of interpretation here with respect to the policy. Whether this type of contamination is covered from this source."

City has a year to sue

Ward says the city is acting now because the policy gives it a year to sue.

"The year is almost up, so we had to start the proceeding now," he said. "That doesn't mean we can't have further discussions with the insurance companies after that."

The city has separate insurers to cover claims on property not owned by the municipality. About 20 per cent of the contamination was off site. Those third party insurers have also refused to pay.

"They've taken the same position as this insurer but we have we have time to have discussions with them," Ward said.

The city says it will file details surrounding the loss and the refusal to pay.

All three insurance companies named in the Halifax Regional Municipality lawsuit declined to comment when contacted by CBC News.