Massachusetts Subscriber

A

The steam boiler insuring agreement promises to pay for direct damage to covered property caused by a covered cause of loss, and the loss and expense resulting from the unnecessary interruption of business. Covered property is defined in the policy as property “you” (the named insured) own. A covered cause of loss is defined in the policy as an “accident” occurring on “your” premises, and an “accident” is sudden and accidental breakdown of “any refrigerating or air conditioning system, piping and accessory equipment.” Further, at the time the breakdown occurs, it must become apparent by physical damage that requires repair or replacement of the equipment or a part of the equipment.

The question becomes one of fact. Was it a damaged valve that caused the leaking ammonia or was it a sound valve that was not properly secured? Was the valve damaged either before the leak or during the explosion after the leak? However, there need not have been damage to the valve prior to the leak for coverage to apply. If the exploding of the gas released from the pipe damaged the valve in any way, then the requirement that “it become apparent by physical damage that requires repair or replacement of equipment” is satisfied.

The normal pollution exclusion does not apply to this loss because the policy gives $25,000 additional coverage for hazardous materials clean-up. In that coverage, it says that limitation does not apply to “damage, contamination or pollution caused by ammonia.” Since the $25,000 limitation does not apply to clean-up of ammonia, the full policy limits should apply to the ammonia clean-up.

In summary, this dispute is not really a question of coverage. It is a question of fact. Was the valve damaged either before the leak or during the explosion after the leak, or not? It is up to the insured to present a proof of loss. Finding and presenting the damaged valve should be enough proof of loss to cover the clean-up of the ammonia.