Claims Perspective: Texas and Boston Explosions

In terms of insured claims payouts, the fertilizer factory explosion in West, Texas, likely will generate more claims and higher loss figures than the Boston bombings, according to Mike Barry, VP of media relations for Insurance Information Institute.

Adair Grain Inc.’s West Fertilizer Co. factory fire and explosion has so far caused 12 confirmed deaths, more than 200 reported injuries, and damaged homes, businesses and vehicles. According to local reports early Friday afternoon, 60 people were then missing.

The factory produced anhydrous ammonia, a crop nutrient resulting from a combination of nitrogen and hydrogen, and according to a report from Bloomberg the facility stored as much as 270 tons of the material. The chemical combination is highly flammable and explosive, and was the explosive ingredient used in the Oklahoma City bombing, which killed 168 people on April 19, 1995.

“All the coverage is focusing on Boston this week, but in terms of insured claims payouts, the fertilizer explosion in Texas is likely to generate even larger dollar claims,” Barry said.

Insurance claims resulting from the factory explosion likely will be covered by life, health or P&C insurers, but it is still too early to understand fully the insurance implications, as the area is still in active search and rescue mode. Insurers and policyholders will be working to assess the damage and process claims when they are able access to the area.

"Based on what we know at this point, there appears to be extensive property damage to homes, businesses and automobiles. Building owners may have property insurance to cover their damage and loss of rental income,” said Joe Woods, VP, state government relations for the Property Casualty Insurers Association of America (PCI). “They may also have business interruption coverage for lost income,” he said, adding that insurers are committed to helping the families and business owners affected.

According to recent Bloomberg reports, reports, business interruption will be most likely to drive insurance costs as the aftermath of the Boston bombings continues to play out and the city remains shut down. In the Bloomberg report, Risk Management Services estimated business-interruption payouts to companies shuttered by the blasts likely will exceed insured property damage costs, which may be less than $1 million. RMS said the appraisal does not include costs of treating the injured.

Chris McMahon is a senior editor for Insurance Networking News.

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