Explosion Exclusion Exceptions Are Examined By Court

Commercial Property	Equipment Breakdown
Boiler and Machinery	Sudden and Accidental Breakdown

A boiler and machinery policy insurer declined coverage for claims arising from death, injuries, property damage and business interruption caused by the catastrophic bursting of a pulp digester at a plant owned by the insured, a major international company engaged in the production of paper, packaging products and market pulp.

The declination was based on a policy exclusion for loss caused by an explosion except for explosion of an "object of a kind described below," namely, a covered steam boiler, electric steam generator, steam piping, steam turbine, steam engine, gas turbine, or moving or rotating machinery caused by centrifugal force or mechanical breakdown. The core issue was whether the failure of the digester was an explosion and, if so, whether the occurrence was an exception to the explosion exclusion.

The pulp digester involved was one of 22 huge containers, over 36 feet in height, weighing over 28 tons and holding over 74 tons of wood chips. The contents were subjected to intense steam pressure for two hours during the pulping process.

The production of the entire facility was interrupted for several months when the described digester suffered a catastrophic failure. Engineering analysis and investigation by OSHA determined that a fracture in a metal plate, brought about by intense internal pressurization of the vessel, precipitated the incident. The insured brought a declaratory judgment action for determination that the policy covered the losses sustained.

The court found that the pulp digester was "covered property" along with other machinery and equipment at the facility. The record showed that a representative of the insurer surveyed the facility and assessed the risk. The insurer knew that ".... operations .... involved the use of batch digesters and that (it) would be providing insurance for some accidents to those vessels." The court noted that "accident" was defined as ".... a sudden and accidental breakdown of the 'object' or a part of the 'object.'"

The court concluded that coverage existed under the policy for the losses that occurred. Accordingly, judgment was entered in favor of the insured and against the insurer.

Stone Container Corporation, Plaintiff v. Hartford Steam Boiler Inspection Company, Defendant. United States District Court for the Northern District of Illinois. No. 95C2953. August 26, 1996. CCH 1997 Fire and Casualty Cases, Paragraph 5997.