One of the lesser-known insurance contracts is the one especially designed to cover boilers. Boiler insurance or boiler and machinery insurance is a type of casualty insurance covering damage to property of the insured or of others for which the insured may be responsible, and for damages from personal injury or death of any person caused by the explosion or collapse of boiler.
We could spend days discussing the intricacies of boiler and machinery claims, but we will break the topic into a few posts here to give a general survey of a few topics and issues that arise in these claims. One of the questions that arise is whether there was an "accident" or "accidental breakdown" that is covered under the boiler and machinery policy.
In Lakeshore Marine v Hartford Accident & Indemnity Company,1 the escape of chlorine gas from a tank in the insured’s hydropneumatic chlorinator system was an "accident" within the meaning of the terms of the boiler and machinery insurance policy . The insured sustained the burden of proving that the tank, which was part of the system used to chlorinate the water in the restaurant on the premises, was an "object" within the meaning of the policy. The insurer then contended that the escape of the chlorine gas was not an "accident" under the terms of the policy because the leakage took place at the valve and there was also corrosion, a cause specifically excluded by the policy. Upon review of the events that led to the loss, there was evidence that corrosion was present within the chlorinator system, but, as the insured argued, the corrosion was not the event out of which the loss stemmed.
The court concluded that the escape of the gas was not excluded from coverage by the corrosion provision within the policy. The court held that the loss was covered under the policy.
These claims are complicated and they often involve interaction and evaluation alongside property insurance policies to determine whether the property or boiler and machinery insurer are responsible for the loss depending on the facts. Then if pursuing the boiler policy, there are pages of limitations and exclusions to which the insurer may direct their investigative efforts. It can be an expert-intensive analysis to appropriately navigate the boiler and machinery claim process and get to the recovery phase. I will cover additional interesting topics that arise in this niche within insurance claims in the upcoming weeks.