Boiler Damage — Condition or Event Inside?
Q
Our insured, covered on the commercial property policy CP 10 30 10 90, suffered the following loss. In January water was seen coming out an unoccupied building. The fire department was notified. They turned off the water and requested the power company to turn off the power, which it did. When the management company was notified a few days later, on inspection they found the boilers had frozen and were damaged.
The insurance company has denied coverage based on the limitation in the policy for loss or damage to steam boilers resulting from any condition or event inside such equipment. We believe the event causing the damage was the power company turning off the power, and therefore outside the equipment.
Maine Subscriber
A
We agree with your interpretation regarding coverage for the freezing loss to the boilers. The limitation in the policy concerns loss caused by a condition or event inside the equipment. The event which resulted in the loss occurred outside the equipment, namely, turning off the power. Further, there appears to be an unbroken chain of events from the power company turning off the power to the boilers being found frozen.
Part C limitations need to be read in context. The limitations apply to items that should be separately insured, such as jewelry, and to losses that are foreseeable and therefore uninsurable. For example, if the boilers were damaged due to lime buildup, the loss could have been prevented through proper maintenance and is therefore not covered. The freezing loss was outside the insured's control, and is covered.
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