subject: Insurance Issues - Contamination - Part II [print this page] For example, a fire may occur in a frozen food packaging plant. As a result of the fire, the packaging of the stock becomes contaminated and has to be replaced. In those circumstances, the damage would be covered by the policy even though contamination may be excluded in that it was itself caused by a non-excluded peril, namely fire and smoke pollution. An example of the second part of the proviso could perhaps be where the concrete floor of the factory has become contaminated over a period of time with inflammable chemicals. Eventually, as a result of the build-up of chemicals, a fire was started. The damage resulting from that fire would be covered under the policy.
Two US cases illustrate the circumstances in which the contamination exclusion can be invoked. In the case of American Casualty Company of Reading, Pennsylvania^. A.L. Myrick, 304 F2d 179 (1962), quantities of chickens, eggs and other products were stored from time to time in a refrigerated storage room. The storage room was cooled by means of an ammonia coolant which flowed under pressure through a system of overhead coils. A Vi pipe connected to one end of the coil system supplied the ammonia coolant to the coils and a suction pipe connected to the opposite end evacuated the ammonia as it accumulated in the coils. In the course of the defrosting operation, the refrigeration system gave off dense clouds of gaseous ammonia. This had resulted from one of the coils falling to the floor and separating from the 1/2n inlet.
Insurance Issues - Contamination - Part II
By: Willis J. Watson
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