Damage To Insured Property Caused By Corrosion Not Covered

Commercial Property	Direct Cause of Loss
Boiler and Machinery	Exclusion

A boiler and machinery policy, applicable to equipment in a power company's generating station, contained an insuring agreement to pay for loss or damage to the insured's property directly caused by an "Accident," as defined, to a covered "Object."

"Accident" was defined in the policy as ". . . .any sudden and accidental occurrence to the Object, or part thereof, which results in damage to the Object and necessitates repair or replacement of the Object or part thereof; but Accident shall not mean. . . .corrosion. . . ."

Several turbine blades were directly damaged in an accident at the generating station. The replacement cost was within the policy deductible, but the incident prompted an examination of the blades in the turbine by the turbine manufacturer. Though not directly damaged in the accident, some of the blades were found to have been damaged by corrosion pitting and stress corrosion cracking. The insured decided to replace the suspect blades (not involved in the accident) and brought a lawsuit against the insurers to recover the cost. The insurers appealed a trial court judgment in favor of the insured.

The issue was whether the policy covered the cost of replacing the blades. The insured acknowledged that corrosion per se was not included in the protection afforded by the policy but contended that damage caused by corrosion was not excluded. It said that ". . . .the stress corrosion cracks are not themselves corrosion, but unexpected accidental damage caused by corrosion. . . ." It argued that, accordingly, the damage claimed was covered.

The appeal court noted expert testimony that corrosion caused the cracks. It found that the policy covered damage directly caused by accidents, specific events. Corrosion was specifically excluded from the kinds of happenings that trigger coverage, and, therefore, damage directly caused by corrosion was not covered.

The trial court's judgment was reversed in favor of the insurers, with all court costs assessed to the insured.

Central Louisiana Electric CO., INC. v. Westinghouse Electric Corporation ET AL. Louisiana Court of Appeal, First Circuit. No. CA 89 1029. October 16, 1990, 569 So.2d 120. CCH 1991 Fire and Casualty Cases, Paragraph 3020.