New York City Flatiron District Steam Pipe Explosion – Personal Insurance Considerations for Owners of Luxury Property



By Kurt Thoennessen, CAPI

July 19, 2018

 

Manhattan’s Flatiron District suffered a massive steam pipe explosion on Thursday July 19, at 6:39 AM that opened a large hole in the street. Fortunately, there were only a small number of minor injuries reported, but the explosion of an 86-year-old pipe left a significant amount of damage in its wake.

The purpose of this article is to give owners of luxury property in New York City a quick understanding of the damage that can be caused by events like this and how their personal insurance policies (Condominium, Cooperative, Renters, Valuable Articles, Automobile) may respond.

First, let’s discuss the possible types of damage and exposures to loss that could arise from a steam pipe explosion.

 

Possible Damages and Exposures to Loss:

Steam damage – Hot steam escaping 6 stories into the air in Manhattan can cause damage to the surrounding building exteriors and interiors, if windows and/or doors are open. The steam may also carry debris with it as it travels at high speeds, which can cause direct damage to anything that gets in the way. Luxury condominium and cooperative owners may also notice water in their apartments because of the steam.

Explosion damage – Explosions cause vibrations that can damage buildings and personal property. Paintings may fall of walls, fragile items, such as glass ware or porcelains, can break and cracks can form in walls.

Forced evacuation – The steam pipe explosion in New York’s flatiron district resulted in the evacuation of 28 buildings. Property owners in those buildings will have to find alternative living arrangements until the buildings have been cleared.

Falling debris damage – The exploded steam pipe sent asphalt, mud, water and other debris up to 6 stories in the air. Falling debris can cause serious damage to cars, building facades and personal property.

Contamination / Pollution – One of the major concerns that accompanied this event was the possibility that the area surrounding the exploded steam pipe was contaminated with asbestos and/or other contaminants. Affected by-standers, fire fighters and emergency responders were encouraged to place their clothes in a plastic bag and shower as a precaution. Asbestos exposure can lead to serious diseases including asbestosis, lung cancer, and mesothelioma cancer.

 

Coverage Analysis:

Here are some of the coverages contained in insurance policies designed to cover luxury assets and property that may be called upon in situations like this.

 Condominium / Cooperative Policies:

Additional Living Expenses – Most policies will cover the increase in your normal living expenses if you are unable to use your condominium or cooperative due to a forced evacuation by a civil authority.  This could include hotel fees, meals out, and additional transportation costs.

Additions & Alterations – Damage to the interior of a condominium or cooperative from an explosion is typically covered. Damage caused by steam and falling debris would also likely be covered.

Personal Property – Damage from explosion to personal property, such as furniture, within a condominium or cooperative is typically covered. Damage caused by steam and falling debris would also likely be covered.

 

Renters Policies:

Additional Living Expenses – Most policies will cover the increase in your normal living expenses if you are unable to use your rental apartment due to a forced evacuation by a civil authority.  This might include hotel fees, meal out, and transportation costs.

Personal Property – Damage from explosion to personal property, such as furniture, within a rental apartment is typically covered. Damage caused by steam and falling debris would also likely be covered.

 

Valuable Articles Policies:

Valuable articles policies provide “All Risk” coverage for items insured under them with no deductible. This means that any: works of art, jewelry, sculptures, furs, couture, rugs, and other valuable property covered on a valuable articles policy will likely be covered for damage caused by steam, falling debris, explosion and contamination.

 

Automobile Policies:

Physical Damage – Damaged caused by steam, explosions, falling debris and contamination are covered by most luxury automobile insurance policies, if they have “Comprehensive” coverage listed on the policy for the vehicle that was damaged.

Any time there is a disaster there is an immediate need to mitigate further damage from happening and to assess the damage that has occurred. Insurance is not the first step in the emergency response process, but it is an important one to address as part of the overall event.

Disclaimer: This analysis was developed using the personal insurance policy contracts provided by luxury insurance providers: Chubb Personal Risk Services, PURE Insurance, AIG Private Client Group, and Cincinnati Insurance Company. Policy holders should speak with their insurance agent to determine exactly how their specific policy will respond to an event like the NYC steam pipe explosion.

 

 



Kurt Thoennessen

Kurt is a Senior Advisor with Ericson Insurance Advisors and a Certified Advisor of Personal Insurance (CAPI). He works with high net worth individuals and families to design and implement risk management and insurance programs.