Is consequential short circuit covered?

[Pratik Karki]

Hi All,

Trust all is well.

I am a Surveyor in Nepal. I wanted to ask about a situation I was facing in one claim. Since Nepal Insurance Laws and Indian counterpart Laws are very similar, I felt this platform would be best to ask my query.

Background - Due to failure of spring mechanism of a Jaw Connection in a Air Circuit Breaker during switching in Unit 3 ACB, it caused explosion. Adjacent Units 1, 2, 4 and 5 got damaged due to consequent fire ball and blast force. This also caused back flow of Current towards 330 kVA Transformer and back flow caused damages (short circuit - internal windings, Transformer oil, etc).

My Question is as, 

1) Is the Transformer loss covered? 

Nepal Property Insurance Policy states (the Transformer and panels were insured under normal property insurance policy and not under EEI) in exclusion that losses to items due to electrical failure/causes are not covered but further losses resulting from it are covered I.e., for eg if high voltage in CB caused fire then the CB is not covered but losses to additional equipment due to fire is covered. Since actual cause of loss of transformer is consequent back flow of Current from the initial explosion, I believe Transformer loss is not covered.

2) I was not allowing the cost of replacement to be assessed for the Unit 3 ACB as it was what exploded/failed initially. But insured argues that since it was mechanical fault failure of the Jaw Assembly, only that failed component should be not allowed. Rest components of Unit 3 should be allowed in assessment. Is his point valid?

Is my understanding and interpretation correct?

Since nepali policy schedules is in nepali language, the exact meaning is very vague when roughly translated to English but I think nepali law makers were trying to state the same meaning in the nepali property policy as any similar property policy wordings as rest of the world in terms of exclusion and insured perils. Also there aren't forums for discussion here in Nepal.

I would be greatly thankful to respected seniors to provide valuable opinion on this subject matter.

Best Regards, 

Pratik Karki 

B.Tech., Prov. ACILA

+977-9801284453 (whatsapp) 

[Abhay Gujar]

'Dear - Pratik',

The Damages to the Circuit - Breaker - & - Transformer are not covered in a Fire - Policy because - they are losses in a Machinery Breakdown Policy.

The failure of the spring mechanism of a Jaw Connection in an Air Circuit Breaker during switching in Unit 3 ACB, is also a - 'Mechanical - Breakdown'. So, it is not covered in a - 'Fire - Policy'.

However, damages due to Explosion, to the Adjacent Units 1, 2, 4 and 5, which, is a covered peril in a Fire - Policy & therefore would be payable, in a - 'Fire - Policy'.

Strictly speaking, the Root Cause of the Explosion is also a - 'Breakdown' - [failure of the spring mechanism - & - 'short - circuit - blast' - leading to an - 'Explosion']. So, many surveyors in India, may not admit damages to the Adjacent Units 1, 2, 4 and 5, also.

But as a lenient view, they can be indemnified, if the - 'Insurer' - agrees.

'With - Regards',

'Abhay'.

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Abhay Gujar

Head - Technical

UIB Insurance Brokers (India) Pvt. Ltd.

Mobile: +91-9920793902

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[Pratik Karki]

Abhay Sir,

Thank you for the information. Really appreciate your technical analysis of the claim.

One more question sir, insured argues that in case of the Transformer, which was at a distance from the ACBs connected by busbar; after the explosion and ensuing fire caused busbar to disintegrate which in turn caused back flow of Current from the generator towards the Transformer. 

Their argument is in case of transformer, the Root Cause is the fire which caused the back flow and not the initial short circuit blast and hence damages to Transformer should be allowed. 

Is this justified?

Thank you!

Regards,

Pratik Karki 

Surveyor

Nepal

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[Abhay Gujar]

'Dear - Pratik',

Here the - 'Proximate - Cause - Theory' - will have to be 'applied'.

Let us arrange the happenings in a - 'sequence': - 

(1)  Due to failure of spring mechanism of a Jaw Connection in an Air Circuit Breaker, during switching in Unit 3 ACB...

(2) Explosion.

(3) Fire - Ball.

(4)  Adjacent Units 1, 2, 4 & 5 got damaged, due to consequent fireball and blast force.

(5) Disintegration of Bus Bar due to Fireball - Heat - & - Blast - Force.

(6)  Which in turn, caused back - flow of Current from the generator towards the Transformer. 

(7)  This backflow caused damages - (short circuit - internal windings, Transformer oil, etc).

So, the Proximate Cause of Transformer Damage was Backflow of Current, which was caused by the disintegration of the busbar, which was because of the - 'Fire - Heat / Blast - Force'.

The cause marked in 'Blue' above, is covered in the 'Fire - Policy'.

So, the Claim for Transformer - Damage is covered.

Here, however, we need to 'check' with some - 'Electrical - Engineer', whether the backflow current is supposed to 'trip' the Transformer, to - 'protect' - it from the - 'Backflow - Current'.

If that is the case, then we need to check if such protection was provided & it did not function.

If it did not function then if, the - 'Such - Protection - Mechanism' - went under a - 'breakdown'.  

If it was under a breakdown then, the transformer damage claim is not payable.

But if such a tripping mechanism was not provided/installed, then the claim becomes payable.

Regards,

Abhay.

N.B. :- I will also consult my old senior colleague, who is an - 'Electrical - Engineer'.

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Abhay Gujar

Head - Technical

UIB Insurance Brokers (India) Pvt. Ltd.

Mobile: +91-9920793902

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[Pratik Karki]

Dear Sir, 

Thank you for the clarification. All my doubts are clear now.

Much appreciated your guidance. 

Regards,

Pratik Karki

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