W. R. Berkley Files Suit Against West Fertilizer Plant Owner

Subsidiaries of W. R. Berkley Corp filed a subrogation lawsuit against the owner of the Texas fertilizer plant that exploded destroying the majority of the community, according to court documents.  Acadia Insurance Company, Continental Western Insurance Company, Union Standard Insurance Company and Union Standard Lloyd are the insurers in one of two lawsuits filed against Adair Grain, Inc., the parent company of West Fertilizer Company.  These companies insure churches, businesses and individuals affected by the massive explosion on April 17, 2013. 

A spokesman for the Berkley Corp. refused to comment on the case.  Based on the lawsuit which was filed in McLennon County District Court, a bank is insured by Acadia; a car dealership is insured by Continental Western; a TV and appliance business, an auto supply store, and a bakery are insured by Union Standard Lloyds; two churches and an inn are insured by Union Standard Insurance.

 The Berkley companies are alleging negligence in the operation of the fertilizer retailer.  They state that flammable material, shockwaves and debris “caused severe damages” to the policyholders’ businesses and properties. The lawsuit reads, “Adair’s negligent act and omissions were the proximate cause of the explosion that resulted in damage to the plaintiffs.” Attorney Paul A. Grinke of McCathern in Dallas filed the lawsuit. 

The cause of the April 17th explosion at the West Fertilizer Company is still under investigation.  However, authorities did find ammonium nitrate at the location.  It appears the facility was storing hundreds of tons of the volatile chemical compound in the rural town of approximately 2,800.

The number of homes destroyed has increased to 140, based on the latest tally from the Insurance Council of Texas.  A retirement home, a school and an apartment complex also sustained substantial damage.  There were fifteen fatalities and up to 200 people injured as a result of the blast. 

A woman who lives in the apartment complex next to the plant filed the other lawsuit against Adair Grain. 

At present, West Fertilizer’s insurance carrier is not known.  However, PC360 has determined that only a handful of agribusiness carriers would insure this type of risk.  Any agent handling this type of business would ask whether ammonium nitrate was stored on the premises.  While this would not make the risk uninsurable, it would definitely demand further underwriting review by an insurance company. 

In addition, PC360 recently confirmed that facilities with similar operations stopped storing ammonium nitrate to prevent additional regulation.  Any facility which stores the volatile chemical compound is required to register with the Department of Homeland Security.  West Fertilizer Company does not appear to have been registered with the DHS. 

Source: www.propertycasualty360.com

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