Insurance provisions related to explosions, like all other terms, are subject to the rules of construction applied to all insurance contracts. Typically, property damage caused by explosions is covered under the policy. However, some policies may expressly define the term “explosion” to exclude events that would generally be defined as such.1 For instance, policies may exclude and thus not cover any of these instances that would seem to constitute an explosion: shock waves caused by aircraft (“sonic boom”), electric arcing, rupture, or bursting of rotating or moving parts of machinery caused by centrifugal force or mechanical breakdown, water hammers, rupture or bursting of water pipes, rupture or bursting due to expansion or swelling of the contents of any building or structure caused by or resulting from water, or rupture, bursting or operation of pressure relief devices.2
All adjusters know that with property damage—in particular with explosions—if there are no eyewitnesses to corroborate events, you can only analyze the physical evidence available after the incident. This is why the duty to analyze and preserve evidence immediately is so crucial. Once it’s determined that an explosion occurred, then the next step is determining what aspects of the damage will be covered under the policy.
Where an explosion occurs during and after the commencement of a fire, courts have often held that the fire is the direct and proximate cause of the loss, thus providing coverage.3 This is even the case where the policy contains an exception against losses from explosions as well as in those where the policy does not contain such a provision. Similarly, where damage is caused by a explosion of gases that accidentally came in contact with the flame of a lighted gas jet, it has been covered as damage by fire.4
One interesting case, Mork v. Eureka-Security Fire and Marine Insurance Company, dealt with an explosion and subsequent damage to a heating and plumbing system.5 The insured had a fire policy with an endorsement with the following language: “the coverage of this policy is extended to include direct loss or damage by *** explosion.” The damage was caused by the freezing of water in the plumbing and heating system, due to the failure of the oil burning furnace to function in sub-zero weather because of an explosion in the combustion chamber. The court looked at a number of cases, including Norwich Fire Insurance Society, Ltd. v. Board of Commissioners, where an explosion and ensuing fire in a grain elevator disabled drying machinery, resulting in the deterioration of corn.6 In Mork, the court ruled in the explosion was a direct loss and damage by explosion within the extended coverage endorsement, stating, “The freezing in the instant case was not remote to the occurrence of the explosion, but an immediate and direct result. To say that subzero weather in Minnesota in midwinter is something that the parties did not contract with reference to is to ignore realities.”7
In Goodyear Rubber and Supply, Inc. v. Great American Insurance Company, the court determined the obligations of insurers to provide coverage for insured’s liability for an explosion and fire that set a salvage operation in motion.8 There, Goodyear purchased two insurance policies from Great American, a “Select Liability Policy” and a “Catastrophic” or “Umbrella” policy. While a barge owned by Pacific Inland Navigation Company was discharging gasoline, a hose assembly sold by Goodyear leaked, causing an explosion and fire. The tug Chinook, owned by Shaver Transportation Company, removed the barge to safety and helped put out the fire. The question posed was whether Goodyear’s policy covered the salvage claim. The court held the salvage was a covered loss, noting “the damage caused by the occurrence of explosion and fire, set the salvage operation in motion…it would be a strange kind of justice, and a stranger kind of logic, that would hold the defendant to be liable for as much as $450,000 if the barge and its contents had been consumed by fire, but free of liability for a much lesser amount because of the fortuity of the rescue.”9
Taking case law into consideration, it is important to always closely review the sections of your insurance policy that deal with explosions, fire, and subsequent damage; pay attention to what’s excluded and the language used in the policy.
1 Couch on Insurance Third Edition Risks and Activities Covered by Insurance Policy §§ 150:6 Explosion, generally; 21:1 et. seq., 22.1 et. seq.
2 Couch on Insurance § 150.6.
3 Rossini v. Security Mut. Fire Ins. Co. Of Chatfield, Minn., 46 Cal.App.675 (2d Dist. 1920).
4 Scully v Bremer County Farmers’ Mut. Fire Ins. Ass’n., 215 Iowa 368 (1932).
5 Mork v. Eureka-Security Fire and Marine Ins. Co., 230 Minn. 382 (1950).
6 Norwich Fire Ins. Society, Ltd. v. Board of Com’rs, 141 F.2d 600 (5 Cir. 1944).
7 Mork, 230 Minn. 382, 389.
8 Goodyear Rubber and Supply, Inc. v. Great American Ins. Co., 545 F.2d 95 (9th. Cir. 1976).
9 Id. at 96.