West Fertilizer Co. Had $1 Million Liability Policy

May 6, 2013 — The fertilizer plant that exploded last month in West, Texas had just $1 million in liability insurance, according to lawyers who filed lawsuits against the company. If the company is found negligent and required to pay for the damage, that amount of coverage would only pay for a small fraction of claims. According to the Insurance Council of Texas, the explosion may have caused $100 million in property damage alone.

Some of the most damaged buildings include a 50-unit apartment complex, dozens of homes, a nursing home, churches, and three schools. Even many homes that look fine on the outside have significant roof damage caused by the pressure wave from the explosion, which will be expensive to fix.

According to lawyer Randy C. Roberts:

“A million dollars is a pathetic amount for this type of dangerous activity. If you want to drive a truck down the interstate, you’ve got to have $750,000 in coverage, even if you’re just carrying eggs. But if you want to put this ammonium nitrate into this town next to that school and that nursing home and those houses, you’re not required to carry insurance.”

Like many states, Texas does not require a certain amount of liability insurance for companies that store large amounts of hazardous chemicals. When states do set requirements, they are often significantly less than the potential damage an accident can cause. Companies often get just enough insurance to cover their own property damage, but not the victims from an accident.

Lawyers expect the plant’s owner, Donald Adair, to ask a judge to split the $1 million insurance money among the plaintiffs who have filed lawsuits and then file for bankruptcy. It is likely that many individuals who were injured or suffered property damage will not receive the compensation they deserve, and they will need to rely on their own homeowner’s or health insurance to cover expenses.

As the investigation continues, it is possible that other parties could be held responsible and liable for claims. The state fire marshal has estimated that the investigation will conclude by May 10.

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