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7 years ago · by · 0 comments

FERTILIZER PLANT BLAST: $100 MILLION DAMAGE – $1 MILLION INSURANCE

The ammonium nitrate fertilizer plant in West, Texas that exploded last April had only $1 million in Liability insurance, which could cover as little as one percent of the estimated damage from the blast.

What’s more, according to an attorney for Adair Grain, Inc., which owns the West Fertilizer Co. the company did not carry Excess or Umbrella coverage.

The explosion occurred on April 17, killing 15 people (including 10 first responders), and injuring more than 200 others The blast, which left a 90-foot wide crater and registered on the Richter earthquake scale,, damaged or destroyed more than 150 buildings up to nearly 40 blocks away. A spokeswoman from the state insurance department estimated that damage could cost tens of millions of dollars, adding that other sources have pegged potential losses as high as $100 million.

At least six lawsuits representing hundreds of plaintiffs have been filed against the company and its owner. One of the plaintiffs’ attorneys, Randy Roberts, says that even though he was “floored” by the low level of West Fertilizer’s Liability coverage, “It’s not uncommon to see very serious operations [in Texas] conducted with minimum insurance or, in fact, no insurance.”

He expects that Adair will ask a judge to divide the $1 million in Liability coverage among the plaintiffs, and then file for bankruptcy – after which attorneys will look to see if other companies can be held liable for the explosion. “I don’t see the million taking care of even my three clients, much less the hundreds of people that need to be taken of,” says Roberts.

This disaster reinforces the need to make sure that you carry enough Liability coverage to protect your business against a worst-case scenario. As always, our Scurich Insurance Services Representatives are standing by ready to help.

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Scurich Insurance Services
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