Inland Marine Coverage as All Risk

Our insured operates a stone quarry and has a stone crusher covered under an inland marine form. The motor that pumps oil to cool the main motor failed, causing the motor to run without oil. This caused the motor to overheat and seize up. The crusher has fail-safe devices meant to prevent such damage, but it has been determined by an investigation that a metal conduit housing an electrical cable for fail-safe devices had been crushed. This caused the wire to either sever or short-out and made the fail-safe devices inoperable. The cause of the crushed conduit is unknown, but could probably have been caused by a rock or some other object hitting it.

This IM policy is on an all risk basis and we think the loss to the crusher should be covered. What is your opinion?

Indiana Subscriber

Inland marine policies are usually on an all risk basis like this one, and that means that there is coverage for direct physical loss of or damage to covered property unless there is a specific exclusion to prevent the coverage. There was direct damage to the crusher, so unless the policy has an applicable exclusion, there is coverage for this loss.

Some IM policies have an exclusion for damage caused by artificially generated current creating a short circuit or other electric disturbance, but even if your policy has that exclusion, the direct damage was caused by the lack of oil and overheating of the motor, not the artificially generated current.

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