G 7401.5

CHAPTER 7. BOILER AND MACHINERY INSURANCE

EXPLANATION AND REQUIREMENTS

7-1. BOILER COVERAGE.

a\. If there is a steam boiler in operation for the

development, specific boiler explosion insurance is

required. (The basic property insurance policy does not

cover the damage caused by a boiler explosion.) In

determining the adequacy of the amount of this coverage

there must be careful review and consideration of all the

facts and exposures for the purpose of estimating the

maximum possible amount of a single loss by a steam

boiler explosion to the boiler, piping and to the

building housing the boiler.

b\. The required minimum limit for the boiler insurance

should be at least \$100,000 per accident, per location on

a replacement cost basis. After careful examination of

all the related information in any given case, it may be

determined that the required minimum limit of \$100,000 is

inadequate. In that event, a greater amount of coverage

shall be purchased. Determination of the adequate amount

is the responsibility of the HA.

7-2. POLICY FORM.

Boiler insurance shall be evidenced by a standard Insurance

Service Office boiler and machinery policy, broad form,

including repair, replacement, expediting expense. (The basic

CGL policy covers bodily injury liability losses caused by a

boiler explosion.)

7-3 INSPECTIONS.

a\. All boilers, including steam boilers, shall be subject to

annual inspections except hot water supply boilers or

tanks which are directly fired with oil, gas or

electricity when none of the following limitations are

exceeded:

\(1\) a heat input of 200,000 BTU/hr.

\(2\) a water temperature of 210 degree F (99 degree C)

\(3\) a water-containing capacity of 120 gallons

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b\. Such excepted boilers and tanks should be equipped with

ASME National Board constructed and related safety and

relief valves. Such inspection should be conducted by an

authorized inspection agency, that is, either:

\(1\) a state or local inspection facility or other

authorized inspection service created in accordance

with state or local law for the purpose of

inspecting such boilers, or

\(2\) an insurance company which has been licensed or

registered by the appropriate authority of a state

or locality and whose inspection services are

acceptable under state or local ordinances, if

applicable.

7-4. ACC REQUIREMENT.

The ACC requires that only steam boilers be insured. However,

since the cost of the inspection service is included in the

boiler insurance premium, the Department recommends that all

boilers subject to state inspection be included in the boiler

policy.

The ACC requires this coverage only if steam boilers have been

installed. However, Boiler and Machinery policies issued by

most insurance companies have been expanded to include

coverage for air conditioning compressors, pumps, piping, and

similar equipment, as well as electrical transformers,

miscellaneous mechanical, electrical, and telecommunications

equipment for perils that would not be covered under the basic

property insurance policy. If a HA has property of this type

with high values, consideration should be given toward

purchase of a Boiler and Machinery policy, even though no

steam boilers are owned.

7-5. JOINT LOSS AGREEMENT.

Unless the same insurance company insures both the property

insurance and boiler and machinery, the HA should request that

each company add a joint loss settlement agreement to each

policy. It prevents a disagreement between the property

insurer and the boiler insurer as to which policy should

respond to a particular loss and in what amounts. When both

policies are appropriately endorsed, each insurer pays one-

half of the disputed amount, pending resolution of the issue

between themselves.

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7-6. PARTIES INSURED.

A PHA/IHA shall be shown as the named insured. The U.S.

Department of Housing and Urban Development should not be

named as an insured.

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