Insurance Claim

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7^th Circuit Court of Appeals

Case Name: Aluminum Recovery Technologies, Inc. v. Ace American Insurance Company

Case No.: 22-2556

Officials: Easterbrook, Wood, and St. Eve, Circuit Judges

Focus: Insurance Claim

During a renovation at Aluminum Recovery Technologies (ART), a furnace malfunctioned, leading to the escape of molten aluminum, which damaged both the plant and the furnace itself. Although ACE American Insurance compensated for some of the damages, they declined coverage for replacing the furnace’s refractory. ART filed a lawsuit against ACE, contending that the damage resulted from a furnace explosion, thus falling under insurance coverage. However, ACE countered, citing policy exclusions unless damage to the refractory is a direct outcome of specific perils like fire, lightning, windstorm, hail, or explosion.

The Seventh Circuit upheld the district court’s ruling favoring ACE. The court reasoned that the explosion wasn’t definitively linked to the leak, and ART lacked engineering evidence to support its assertions. Additionally, the court noted that ART had agreed to the insurer’s experts’ investigation protocol, which involved destructive testing contributing to the need for refractory replacement. Consequently, the insurer bore no responsibility for the added expenses stemming from refractory lining replacement.

Affirmed.

Decided 02/23/24

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