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Insurance agents often are blamed when accidents or claims occur and their customers don’t have enough insurance coverage. Here are two helpful tips: 

  1. If you only handle some of your customers insurance, get a statement signed by your customer saying that they only want you to handle the specific coverage that you are placing for them.
  2. If the insured wants to save some money by buying less insurance, have them sign a statement rejecting your recommendation.

The recent explosion in West , Texas resulted in 15 deaths, 200 injuries and $100 million or more  in property damage.  According to the article in Property Casualty 360.com , the owner of the fertilizer plant had only $1 million in liability coverage. If you think that is inadequate coverage, what do you think the agent should have recommended? Will this result in an E&O claim against the agent? You decide.

The West Fertilizer Co., site of a massive explosion last month that killed 15 people and damaged or destroyed more than 100 homes, two schools, and multiple businesses, carried $1 million in liability insurance, PC360 has confirmed. 

The coverage was provided by United States Fire Insurance Co., The Dallas Morning News first reported. United States Fire Insurance Co. is a member of Morristown, N.J.-based Crum & Forster, which is part of the Fairfax Group.

Daniel Keeney, a spokesman for the Adair Grain Inc., says he is not aware of any other insurance for the West, Texas fertilizer retailer. Adair Grain, owned by the Adair family of West, is the parent company of West Fertilizer, which is a $4 million/year operation, Keeney adds. 

A spokesman at Crum & Forster could not immediately be reached for comment. 

Several lawsuits have been filed against Adair Grain since the force of the April 17 blast leveled some surrounding homes. Multiple companies within the W.R. Berkley Corp. group of insurers are among those who have filed suit, claiming negligence on the part of the Adairs. The subrogation suit looks to recoup money paid by Berkley to insureds including individuals, a bank, a car dealership, a TV and appliance store, a bakery, an auto parts store, two churches and an inn. 

Kenney says plaintiffs’ attorneys and those representing the Adairs met late last week to go over the insurance particulars and let the attorneys know the limitations in coverage. 

Paul A. Grinke of McCathern in Dallas, Berkley’s attorney, could not immediately be reached for comment. 

The Insurance Council of Texas estimates insured property losses are $100 million. The total includes estimated insurance payments for the plant, 140 homes, an apartment complex, a middle school and a retirement center. 

The cause of the blast is still under investigation, but authorities say the highly volatile chemical compound ammonium nitrate was found at the site of the fertilizer retailer. Possibly hundreds of tons of the fertilizer were stored at the plant. 

The Texas Department of Insurance says four state agencies with some oversight of these types of facilities—State Health Services, Texas State Chemist, Texas Commission on Environmental Quality, and Texas Agriculture Department—do not require general liability a West Fertilizer-type operation. “Companies that carry insurance are not required to report that information to us,” TDI says in a statement. 

The insurance department says it cannot comment on the investigation but it did quash reports of anhydrous ammonium being involved in the explosion. The tanks were not involved in the explosion or fire, TDI says.

The Adairs have been cooperating with investigators, says Keeney. The family has been visible in West and have attended the funerals of those killed in the blast. 

“They’re heartbroken. They realize they are not going to be in this business any longer,” Keeney says of the Adairs. “Right now they want to sincerely figure out what happened and encourage any actions that would minimize the likelihood of something like this ever happening again.”

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