Q

An insured suffered a loss as a result of corroded and worn tubes in the insured boiler. Our inspection, and further analysis by an independent metallurgist, confirmed that the cause of the loss was depletion, deterioration, and corrosion of the boiler tubes. The boiler and machinery policy states, in part, that an “accident” is a “sudden and accidental breakdown of the 'object'…None of the following is an 'accident:' a. depletion, deterioration, corrosion, or erosion; b. wear and tear.” The insured suggests that the policy language is ambiguous because the policy does not specifically state that if the cause of loss falls within the language limiting the meaning of “accident,” coverage will not be provided for the loss.

Your comments, please.

Illinois Subscriber

A

The type of loss described is a perfect example of the kind of loss to a boiler that the depletion, deterioration, corrosion, or erosion and wear and tear exclusions are aimed at excluding. The coverage is for damage to property caused by a “covered cause of loss,” i.e., an “accident” to the insured object. The definition of “accident” says that deterioration or wear and tear is not an “accident.” An objective reader is not likely to find this arrangement ambiguous.

The only way the boiler and machinery coverage would be triggered is by subsequent sudden and accidental damage to other portions of the boiler or to other property as a result of the leakage. In that case, the insured loss would be limited to the damage to the other portions of the boiler or other property.