A case in point is Hartford Steam Boiler Inspection and Insurance Company v. Underwriters At Lloyd’s and Companies Collectively, et al., 857 A.2d 893 (Sup. Ct. CT 2004). (The other insurers involved were: National Union Fire Insurance Company, International Fire Insurance Company, Aetna Casualty & Surety Company, Home Insurance Company, and Zurich Insurance Company.)
This is a long and complicated case. Briefly, however, a catastrophic explosion at an electrical generating plant took place in 1993, causing more than $28 million in damage. The owner of the power and light company submitted claims to the Hartford and to Lloyd’s, which provided “all risk” property coverage. After investigating the losses, both the Hartford and Lloyd’s denied coverage.
Thereafter, the insured power and light company invoked the joint or disputed loss agreements (referred to in the case as the loss adjustment endorsements) applicable to both policies. These provisions enabled the insured to recover the total loss caused by the explosion by collecting one-half of the amount each from the Hartford Steam Boiler Company and underwriters at Lloyd’s. These endorsements also contained a provision enabling the Hartford and the Underwriters, after payment to the insured, to submit any dispute as to respective liability, to arbitration—which they did. Had this joint or disputed loss agreement not been issued to the insured, it would have been caught up in a long and very expensive endeavor. Care, therefore, should be taken that this type of an endorsement is issued on both policies.• • •
Although not always easy to understand, equipment breakdown insurance is too important a coverage to ignore. Not only does such a policy provide broad, valuable protection, it also complements a well- designed, general commercial property insurance program to help ensure that a business or organization will survive and prosper after a major loss. And that should be everyone’s goal.