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Commercial Property |
Liberalization Clause |
On January 8, 2000, a storage tank at a facility
owned by Southside River-Rail Terminal (Southside) collapsed, dumping
approximately 990,000 gallons of stored, non-owned liquid Uran
28 (liquid nitrogen fertilizer) onto the ground and into the Ohio River.
Southside's property and general liability insurer was Crum & Forster
Underwriters of Ohio (C&F).
Southside and the Uran 28
owner sought recovery from C&F for property damage and loss of the tank's
contents. The insurer denied all coverage because the collapse was not covered
under the Deluxe Property Form Southside had purchased.
Southside sued C&F based on the Liberalization
Clause. C&F had begun marketing the Custom Deluxe Property Form in late
1999 and it defined collapse in such a way that the Southside collapse would
have been covered. Southside argued that, because the Coverage Form was
introduced during the policy period and prior to the loss, it should apply to
the loss. C&F argued that it was a new form with a $75 cost which would void
the liberalization clause. The court reviewed the filings C&F had made with
the State of Ohio and found that it had been filed as a revision not as a new
form. The court also deemed that the small price for the form was a filing or
administrative fee and not a coverage fee. Because of this information, it was
determined that the liberalization clause did apply, so the loss was also
covered.
C&F appealed the case and the appellate court
affirmed Southside's recovery of $910,824 under the Custom Deluxe Property Form.
It also found that the owner of the Uran28 was entitled to recover $476,206.
Southside River-Rail Terminal, Inc. v. Crum & Forster Underwriters of Ohio-Nos. C-030400, C-030423, C-030445-Court of Appeals of Ohio, First District, Hamilton County-May 28, 2004-811 North Eastern Reporter 2d 150