The West Fertilizer Co., site of a massive explosion that killed 15 people and damaged or destroyed more than 100 homes, two schools and multiple businesses, carried $1 million in liability insurance, National Underwriter has confirmed.

The coverage was provided by United States Fire Insurance Co., a member of Morristown, N.J.-based Crum & Forster, which is part of the Fairfax Group.

Daniel Keeney, a spokesman for Adair Grain Inc., says he is not aware of any other insurance for the West, Texas fertilizer retailer. Adair Grain, owned by the Adair family of West, is the parent company of West Fertilizer, which is a $4 million/year operation.

Several lawsuits have been filed against Adair Grain since the force of the April 17 blast leveled surrounding homes. Multiple companies within the W.R. Berkley Corp. group of insurers are among those who have filed suit, claiming negligence on the part of the Adairs. The subrogation suit looks to recoup money paid by Berkley to insureds including individuals, a bank, a car dealership, a TV & appliance store, a bakery, an auto parts store, two churches and an inn.

Paul A. Grinke, the attorney for the group of W.R. Berkley Corp. companies that has filed suit against West Fertilizer Co., calls the glaring lack of appropriate cover “irresponsible” and predicts his clients and others involved in lawsuits against the West, Texas facility that exploded last month will “be left holding the bag.”

“Unfortunately I'm involved in a lot of cases dealing with underinsured properties but I've never been involved in something like this—a facility such as this one with so little insurance for the risk,” Grinke tells NU.

The Insurance Council of Texas estimates the insured property losses at about $100 million. That figure includes estimated insurance payments for the plant, 140 homes, an apartment complex, a middle school and a retirement center.

A criminal investigation into the cause of the explosion has been launched, but authorities say the highly volatile chemical compound ammonium nitrate was found at the site of the fertilizer retailer. Possibly hundreds of tons of the fertilizer were stored at the plant.

The Texas Department of Insurance says four state agencies with some oversight of these types of facilities—State Health Services, Texas State Chemist, Texas Commission on Environmental Quality, and Texas Agriculture Department—do not require General Liability for a West Fertilizer-type operation. “Companies that carry insurance are not required to report that information to us,” TDI says in a statement.

The insurance department says it cannot comment on the investigation but it did quash reports of anhydrous ammonium being involved in the explosion. The tanks were not involved in the explosion or fire, says TDI.

The Adairs have been cooperating with investigators, says Keeney, and “want to sincerely figure out what happened and encourage any actions that would minimize the likelihood of something like this ever happening again.”

Special Reports /

West Fertilizer Co. Carried Only $1M in Liability Insurance

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