It is not unusual for insureds to own private railroad sidings or turnouts as part of their industrial operations. Typically, freight cars are shuttled by railroad companies onto insureds' sidings for loading and hauling of products. Occasionally, substantial property losses occur from derailments on insureds' tracks during routine movement of rail cars. Such a loss site, at which a derailment cost hundreds of thousands of dollars of damage to the siding, roadbed, switch gear, and switch, is shown in Figure 1.

The railroad company also made a claim for repair of the locomotive and rolling stock. This implied that the insured's track had caused the derailment, a common assertion by the railroads. However, inspection of the rail car wheels, which are property of the railroad, told a different story.

In reality, one of the wheel flanges on the lead car started the derailment. As seen in Figure 2, the flange was badly worn and out of specification. A wheel flange that is more rounded on the inner surface and within specification is shown in Figure 3. The problem with worn flanges is that the wheel will tend to climb over a switch point rather than be directed onto the insured's siding. In this case, the lead car derailed by climbing over the switch point. Sharp, worn flanges have a tendency to cut into the rail and lift off the rail, causing derailment.