Texas Fertilizer Plant Has Only $1 Million Insurance To Meet An Estimated $100 Million In Damages

texas_don't mess wih TX240px-West_Explosion_AerialGov. Rick Perry has long proclaimed Texas as a state favorable to business and has limited environmental protections and regulatory rules. Just how favorable is evident in the news that West Fertilizer Co. had only $1 million in insurance after an explosion that killed 15 people and injured 200 — and caused an estimated $100 million in damages. The insurance lobby has long opposed mandatory insurance laws and this case may be an example of the public cost of that success.


Texas is not unique in allowing companies to maintain minimal insurance coverage. The question is now who will pay for the damage if the company is insolvent. The state and county has already paid millions in recovery costs and are unlikely to accept responsibility. United States Fire Insurance Co. says that it will only extend $1 million for the damage under its policy.

The company maintained this ridiculously low level of insurance despite the fact that it housed extremely dangerous chemicals on its property. West Fertilizer reportedly had 270 tons of ammonium nitrate on site as of the end of last year. Texas Insurance Commissioner Eleanor Kitzman issued a statement insisting that her role is to “assess and quantify risk; we regulate the insurers that help consumers and businesses insure their risk.” Apparently they do not regulate well in the case of a company with a huge amount of potentially explosive material.

Lawyers note that if you want to drive a truck on the interstate, you need $750,000 in coverage, but this plant was allowed to maintain just $250,000 more.

The article below notes that a local resident insured her 5-acre property for $1 million because it had a stock tank on it.

In this case, Texas was great for business, just lousy for citizens.

Source: Dallas News

44 thoughts on “Texas Fertilizer Plant Has Only $1 Million Insurance To Meet An Estimated $100 Million In Damages

  1. Insurance is a form of socialism. But you combine private profit with the socialization of losses. The only insurance in Yemen is that owned by shipping companies that have ships at sea which go by their coast. When the pirates take the ship they drive her to a port in Yemen at a dock in front of God and everyone and demand the insurance or ransom. If no insurance the owner of the ship pays the ransom. Pirate territory. Now where was this uninsured factory you speak of?

  2. BarkinDog: You know darn well that it was in Texas. The State that kills people in the name of The People of The Great State of Texas. So you know darn well that those people are disposed to take care of their own and that the Great State will step in and take care of the victims. By the way, what other assests does that company have now that the plant is gone? Maybe the victims can sue and go after whatever assets are left.

  3. For the record there was only 50 tons at the facility on the date of the explosion…. But it’s really a distinction without a difference….. But I do know some of the folks involved as well as a principle…. So I will follow this……

  4. Is there some criminal negligence in failing to maintain this insurance? If not there should be.

  5. Let the hunt for other assets begin.

    Perhaps if they are reached there will be an outcry for decent insurance coverage.

    The wealth of the owners is the first place to start looking.

    Start studying non-dischargeability in Bankruptcy statutes too.

  6. I think Gov. Perry should pay the damages and the owners of this corporation which we know is a person should spend time in jail for the reckless actions which lead to deaths and destruction.

  7. $1 million insurance? I have an umbrella policy for $1 million, in case my other policies are insufficient! Of course, my policy is dirt cheap as the odds of it ever being needed are slim, but that’s no excuse for not maintaining adequate insurance, particularly if there are serious hazards. The executives and the board involved in the company’s decisions should be held personally liable. Or do they get away scott free in Texas?

    Isn’t it great when power is concentrated in the hands of an “elite” few? That’s the “beauty” of the Leftist system: centralized control. Too benefit the masses? Most Leftists seem to think so. But that’s why I conclude that Leftists–of whatever stripe–don’t think.

  8. Swarthmore,
    interesting video. I guess he must be a real leader and a real man because he can shoot a gun!

  9. “The insurance lobby has long opposed mandatory insurance laws and this case may be an example of the public cost of that success.”

    This doesn’t make any sense to me. Why would the insurance industry not favor laws requiring people and businesses to purchase insurance? In Texas, the insurance industry supported recent laws raising the mandatory minimum liability auto insurance because it’s more profitable for them. I dislike the insurance industry as much as the next guy, but I think they’re blameless here. More likely it’s the Chamber of Commerce types that oppose mandatory insurance requirements for businesses.

  10. Michael Val,

    Good point.

    Maybe should have read:

    “The chemical industry lobby has long opposed mandatory insurance laws and this case may be an example of the public cost of that success.”

  11. Am I the only one that thinks that the Federal government shouldn’t pay any kind of relief to a state when something like this happens? It’s up to the state to properly regulate a business and if the business causes harm, within or without the bounds of regulation, then any cost is up to the state. Even if the Federal government has some regulations that apply it’s ultimately a state issue once the Federal government standards are met. This wasn’t a natural disaster by any means. (Yea, I know, the Federal regs regarding notification of DHS regarding the Ammonium Nitrate weren’t met- why not start putting owners and managers in jail too?)

    There seems to be a serious lack of security at this plant as well as others, the Federal and state regulators need to address that if the chemical industry lobbyist’s will allow it. (sarcasm) The theft of anhydrous ammonia is fairly common and dangerous and was also a problem at this plant.
    **

    “Ammonium nitrate was trigger for Texas blast, state agency says”

    http://www.reuters.com/article/2013/05/07/us-usa-explosion-texas-idUSBRE9460GP20130507
    **

    “Texas fertilizer plant where blast killed 14 was repeat target of theft, tampering”

    “The Texas fertilizer plant that exploded two weeks ago, killing 14 people and injuring about 200, was a repeat target of theft by intruders who tampered with tanks and caused the release of toxic chemicals, police records reviewed by Reuters show.

    Police responded to at least 11 reports of burglaries and five separate ammonia leaks at West Fertilizer Co over the past 12 years, according to 911 dispatch logs and criminal offense reports Reuters obtained from the McLennan County Sheriff’s office in Waco, Texas, through an Open Records Request.

    Advertise | AdChoicesSome of the leaks, including one reported in October 2012, were linked to theft of or interference with tank valves. ….

    Thefts of anhydrous ammonia are common in McLennan County, where burglars siphon fertilizer from trailer tanks into 5-gallon propane containers, said McLennan County Chief Deputy Sheriff Matt Cawthon, who took up the position in January.

    After reviewing crime reports from the past 12 years and speaking to deputies who responded to some of the break-ins, Cawthon said security was clearly lax at the plant.

    The perimeter was not fenced, and the facility had no burglar alarms or security guards, he said. “It was a hometown-like situation. Everybody trusts everybody.” ”

    http://openchannel.nbcnews.com/_news/2013/05/03/18040602-texas-fertilizer-plant-where-blast-killed-14-was-repeat-target-of-theft-tampering?lite

  12. For all those who do not follow the Texas follies that is our state Leg, they are considering a bill to exempt even more businesses from any oversight at all in terms of pollution and hazards. As I recall, the standard liablity for light aircraft is one million dollars. That businesses can get away with this is absurd when they are knowingly storing such hazardous materials. Since the GOP controls everything in Texas, our insurance rates are among the highest in the nation, and we have less coverage too. AH the wonders of free market capitalism where the citizens subsidize the rich and make the poor poorer.

  13. SWM, When my sister lived in Houston I was appalled that there is no zoning..titty bars next to daycare centers!

  14. Nick,

    Anyone that recalls first year property law can tell you that there are no state zoning laws in then if I recall the next case was Euclidean zoning out of Ohio…… Strict zoning…..

  15. Ralph Adamo, When you label everything you don’t like as “leftist”, I discount your comment.

  16. You know when you move into the neighborhood that has the junk yard…. There ain’t much you can do about it…. Just like Michigan has the right to farm…. If you move to the country…. You can’t complain about the pig sh$t next door….it is not.. Rocket science at work…..

  17. Bettykath,

    I think if you reread what Adamo wrote…. It says the leftist of whatever stripe….. It could mean partisianshit destroying the country just as easily….. And you know it’s hard for me to believe that Reagan is the last president that could actually get things done…… Without dismantling the construction of the constitution …..

  18. In Texas, free markets will decide the value of a life and if the owner runs out of money, even that debt can be forgiven. After all, this isn’t a financial obligation like a student loan where the debt continues to eternity.

  19. This is the beauty of the corporate veil and LLCs, LLPs, etc. Limited Liability. The state says you are liable up to $1M. If you comply with the law and carry the required insurance, you can make the argument that you were not negligent in under-insuring the company, you relied upon the state to set the standard for you and you met it. Where is the law demanding you insure for all possible accidents? It doesn’t exist; the recourse if there are damages beyond insurance is, as it is for private individuals, the assets of the company.

    So the company is liable, not the owners of it. Most people think that is how it should be; would you like all of your personal assets to be held forfeit because you bought stock in some small IPO of a public company, like a commuter airline, and then it accidentally killed a few hundred people? If investors could lose more than their investment, it would have a huge chilling effect on all investments; investment in startups and small companies would be nearly non-existent. I’ve invested in half a dozen startups I wasn’t running, I would not have invested at all if my liability was not going to be limited to my total investment. i.e. they were all C corporations, S corporations, or LLCs with CPA audited books.

    Limiting the liability of companies to the assets of the company is a necessary feature of investment in companies, if you think that is a good thing.

    We have no real protection against incidents such as this; but we should. It is a failure of the law that invites criminal practice. We allow companies to engage in risky business for profit, which gets siphoned off into personal pockets, and thereby abuse their limited liability, because when the risk fails to pay off and they lose “everything,” everything isn’t worth spit compared to the profits they have already harvested by putting other people’s lives at risk.

  20. Don’t take Ralph’s omnipresent “leftist” comments, seriously. It’s boiler-plate, appended to all of his writing.

    For example, ;my boiler-plate is:

    Molon labe [Greek phrase]

    1. “There’s a mole on your lip, you’d better get that checked out.”

    2. “These beer-bellied yahoos, sashaying seductively, waddling about with guns on their hips, are actually reincarnated Spartan warriors.”

    bill mcwilliams,
    Thanks for the inappropriate diversion, but no, thanks.
    “Special Report on Conspiracies: Everyone’s conspiring against us except me and thee, and I’m not so sure about thee.”

  21. Dr. Turley… Given the FACTS that Governor Ricky KNEW ALL ALONG that plants like this were not only under covered for liability, but fully expected to have the federal govt. pay the rest of the liability… There has GOT TO BE SOME FORM OF PROTECTION for the populous so that us wee taxpayers don’t get whacked again !!!

    Is that possible??

  22. Bob Kauten –

    Why are you so afraid of learning the truth? You obviously don’t know the facts, just the government and MSM’s propaganda. But you probably think you are well-informed. Pity.

  23. Tony C above, has the correct analysis. Here is my take on it. People form corporations to put some wall of separation between self and losses or liabilities. The shareholder has his investment at risk but not his other assets. Nothing wrong with that. Here a corporation had a disaster that will cause damage to others that will exceed corporate assets to repay them. No damaged person is going to get to the bank account of a shareholde in the corporation. Sometimes when we are damaged by someone else we suffer losses which we cannot recover from that someone else. Then, in that situation, we need insurance. Insuracne to cover health, injury, damage to our home from a neighborhood explosion. If we are uninsured then we have taken a risk. Sometimes we cannot insure against risks. When we are born and breath air we start the journey. It is not always easy.

  24. bill mcwilliams,
    What does your delusional ranting have to do with the truth?
    I don’t see the connection.
    I also don’t see the connection between your magical theory on Boston, and the topic of this thread.
    The Boston Marathon bombing hoax was fomented by ingenious, infernal government operatives, under the deepest cover. Bill McWilliams, of course, was able to uncover this conspiracy in a few minutes, by Googling nutcase blogs.
    But he can’t protect us, full-time. Yes, pity.

  25. Ralphie – that is either the best bit of sarcasm ever on this blog or the dumbest thing ever.

    McWilliams – I would strongly advise you to up your dosage obviously your paranoid delusions are escalating. You might want to try actual legitimate sources as hanging around with other paranoid delusional souls is worsening your condition.

  26. In my view, this is an example of an industry that should be categorized as sufficiently hazardous to warrant the imposition of strict tort liability. In such instances, the public interest requires that insurance coverage be mandated in sufficient amounts to cover catastrophic damages. The Texas legislature is responsible for this public policy failure and the taxpayers of Texas should have to foot the bill without federal assistance.

  27. As a Texan, I fully agree with Mike A. Since Guv Perry hates the Federal government so much and wants to secede, he can come up with the money to make those poor folks whole. If the Texas legislature does not do so, then I hope that the rest of the GOP voters in Texas will be forced to rethink their politics.

  28. Mike and Arthur are spot on. Perry wants Texas to secede, here’s the perfect opportunity to show how Texas can do it better..

  29. pete,
    Thanks! This guy, and Uncle Charlie, and the other yahoos in the gun fail videos, totally vindicate my expectations.

  30. Its like you read my mind! You seem to know so much about this, like you wrote the
    book in it or something. I think that you could do with a few pics to drive the message home a
    bit, but other than that, this is wonderful blog.
    An excellent read. I will certainly be back.

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