Microbes in Waste Treatment Plant as Covered Property?

Q

Our client is a food processor who operates a waste water treatment facility at one of its processing locations. The insured is covered under a commercial property building and contents form (CP 00 10 04 02) with the special causes of loss form (CP 10 30 04 02) attached, and a combined business income and extra expense form (CP 00 30 04 02).

The insured's wastewater technicians treated their clarifier with a prescribed amount of chlorine to eliminate undesirable bacteria. This chlorine treatment upset the microbes in the aeration basin which processes the organic load in the water. The same type chlorine treatment had been done about six months prior and did not affect the system. The wastewater system was slowed down for the next few weeks, but recovered enough to process at normal levels.

Then, an operational error resulted in over-aeration of the aeration basin. This excessive aeration, in conjunction with the recent chlorine treatment, caused major damage to the microbes. In order to reestablish the microbes, the company reseeded the aeration basin with new microbes and was forced to operate at reduced capacity. In addition, significant extra expenses were incurred in dealing with the problem.

Are the microbes covered property under the coverage form? If yes, do any of the property form exclusions apply? Additionally, if no coverage exists, what recommendations for covering this exposure can be made?

Arkansas Subscriber

A

It is the consensus of the editors that microbes are animals, and, as such, fall under the “property not covered” section of the commercial property policy. Webster's Dictionary defines “microbes” as “organisms,” and “organisms” are living beings (among other things).

Therefore, the microbes are outside of the coverage grant of the building and personal property coverage form. As to coverage for them, this would need prior negotiation with the underwriter and perhaps a manuscripted form or endorsement.

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