A cold storage warehouse uses an ammonia refrigeration system. One of the pipes carrying the ammonia ruptures, releasing ammonia on the contents of the warehouse. If this client has a separate Boiler and Machinery policy and Property policy the Boiler policy would react in this instance.

Most Boiler policies will limit ammonia contamination between $50K and $250K. The reason being is they are really insuring the break down of the equipment, not the resulting damage to property the breakdown may cause. (They do not insure against the value of the personal property so they do not expect to insure it.)

In our example the ammonia contaminates $5M worth of food product that must be destroyed. The client carried only $50K in ammonia contamination coverage leaving the majority of this loss uninsured. The property policy would not react because this is not a covered cause of loss. The trigger in this case was mechanical breakdown which would be excluded from the property form, thus the need to secure a separate boiler policy.

If this insured was covered by the Affiliated FM proVision form, mechanical breakdown is a covered cause of loss in the base Property form. The trigger in this case, mechanical breakdown, is not excluded. Therefore the entire $5M loss would be recoverable by the insured.

For more information on how a combined property and boiler policy can benefit you or your client please contact your production underwriter.

This information is provided for purposes of illustration only, and does not constitute, replace, or supplement actual policy language. Each loss must be examined with reference to its own particular facts and circumstances, in light of applicable policy language. The liability of Affiliated FM is limited to that contained in its insurance policies.