A refining company claimed under its equipment breakdown insurance policy following an explosion that occurred when a segment of a pipe in a charge heater designed to refine the petroleum product naphtha burst. A 600 degree naphtha mixture was running through the pipe at more than 14 000 pounds per hour and, when the charge heater burst, produced a violent explosion and fireball. The policy excluded damage due to fires and explosions except for ‘non-combustion explosions of steam boilers, steam piping, steam engines or steam turbines’.
Thus the only explosions that were not excluded were steam equipment related explosions.
The charge heater was not steam-powered and did not fall under the exception to the exclusion for fires and explosions. The company had previously admitted that the charge heater was not steam-powered. The claim for $563 000 was dismissed.
This ruling was made despite Kentucky law interpreting insurance contracts liberally so that any doubts are usually resolved in favour of the insured. Perhaps the claimants should have been alerted by the name of the insurer set out below.