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coverageT
USA
4 Posts |
 Posted - 03/06/2004 : 11:57:10
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My feeling on the scenario given is that the loss would be covered since it is not excluded or excepted under HO3. I'm assuming also that we are talking about an a/c built into the dwelling. I know under coverage C artificially generated electric current i.e. power surge- is not covered. I would pay the loss and then pursue a subro against the electric company.
Tony |
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trader
USA
236 Posts |
Posted - 03/06/2004 : 12:28:17
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Don,t get hung by the person who told you "the loss would be covered since it is not excluded......
go to the definition of "risk of loss" (its not in the definitions) go to a marine insurance book.
Look it up and you may understand,if not you are headed for failure. Read my old post on this subject. |
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william s cook
53 Posts |
Posted - 03/07/2004 : 09:37:17
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I have a two part question regarding coverage for one of my clients that has suffered an occurence. He has a very high end home ($ 900,000.00 ). He has had an occurrence of the rocks that were attached by the builder to create a fancy rockface front on his home are falling off. Does he have coverage for this or is this type damage excluded? Nothing in the policy that I found excludes rocks falling off the house.
William S Cook
Public Adjuster |
Edited by - william s cook on 03/07/2004 10:05:34 |
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KileAnderson
USA
875 Posts |
Posted - 03/07/2004 : 09:51:06
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| Why are they falling off? If the builder did not properly attach them it isn't covered. That would fall under the exclusion for deterioration, inherent vice, latent defect or mechanical breakdown. |
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william s cook
53 Posts |
Posted - 03/07/2004 : 10:07:31
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They are falling off because the builder used the wrong methods of sealing and attaching the rocks to the exterior surface.
William S Cook
Public Adjuster |
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william s cook
53 Posts |
Posted - 03/07/2004 : 10:20:49
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The builder has gone out of business and can not be located. The house is only three years old and has had the same carrier since the home was built.
William S Cook
Public Adjuster |
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JimF
USA
1014 Posts |
Posted - 03/07/2004 : 10:29:33
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The language in the HO-3 (04-91) policy which would exclude coverage for the rocks falling off the face of the house for the reasons you outlined is as follows:
Section I - Exclusions
2. We do not insure for loss to property described in Coverages A and B caused by any of the following. However, any ensuing loss to property described in Coverages A and B not excluded or excepted in this policy is covered.
c. Faulty, inadequate or defective:
(2) Design, specifications, workmanship, repair, construction, renovation, remodeling, grading, compaction:
(3) Materials used in repair, construction, renovation or remodeling;
of part or all of any property whether on or off the "residence premises."
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KileAnderson
USA
875 Posts |
Posted - 03/07/2004 : 10:34:53
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Definitely not a covered loss. No way, no how. Simply a maintenance issue.
Mr. Cook, you are very knowledgeable when it comes to policy language. I'm wondering why you would bring up a question like this that seems like a slam dunk. Do you know something you aren't telling us? Is there an angle you have in mind to cover this? The only reason I ask these questions is it just seems like such an easy coverage question. Are we missing something? |
Edited by - KileAnderson on 03/07/2004 11:47:14 |
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william s cook
53 Posts |
Posted - 03/07/2004 : 12:44:46
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Good observation Kile, I prefer to be called Bill by my associates and friends. Remember I said it was a two part question. I think the responses from the experts were all as expected and I concur with the interpretations provided. IE if the client makes a claim for an idetifiable construction defect it is not a covered occurance. However my clients insurers have extended that thought process to exclude a claim for the water that leaked into his home as a consequence of the construction defect. I find many adjusters interpret a construction defect to mean that if the genesis of the damage is found to be in the errant ways of a contractor using defective materials or improperly installs a proper material that allows damage to a structure the resultant damage is excluded in the policy language that "loss caused by defective construction...etc is excluded. In the instant case unknown to the property owner water found its way to interior walls of his structure and caused significant damage. Insurers denied for reasons outlined above. Now I expect as a part of the coming rebuttal I will be considering the experts admonishment for exclusion under the sudden and accidental language. I would counter with the date of manifestation rule. Else we as insureds are all supposed to remove and inspect our drywall on a yet to be determined schedule to allow for avoiding a surprise when the walls turn black. My issue is that as we all agree the policy was intending to prevent an insured saying my contractor screwed up and I want insurers to fix the screwup or suppliers mixed the concrete batch wrong and I want insurers to fix it. Those instances and similar situations were by my observations and apparantly the observations of this learned forum the intent of the policy language. So I await the response to the second part of my question, what exclusion would adjusters apply to a claim to mend the water damaged dwelling and the expense to access the interior for such mending, which includes tearing down the undamaged remainder rockfaced exterior wall?
Thanks to all who read the post and especially to the ones that responded.
William S Cook
Public Adjuster |
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KileAnderson
USA
875 Posts |
Posted - 03/07/2004 : 14:22:16
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Bill,
The only policy that I have at hand at the moment is a State Farm 7955, the standard homeowners policy sold throughout most of the country by State farm with minor alterations depending on the state. The last paragraph of Section I: Losses not insured after 1.n states
"However, we do insure for any resulting loss from items a. Through m. unless the resulting loss is itself a Loss Not Insured by this Section"
They exclude the last part which is n. pressure from or presence of tree, shrub or plant roots.
The way I read this the ensuing water damage from the rock falling off the exterior would be covered but the resulting mold and rot would not because mold and rot are excluded in 1.i.
Now if the insured noticed the water damage and did nothing for a period of time to mitigate and then the damage worsened there may then be some problems with item 2D of the same section which states "Neglect, meaning neglect of the insured to use all reasonable means to save and preserve property at and after the time of a loss, or when property is endangered."
The crucial question will be when was the water damage first noticed? What actions did the insured take to prevent further damage? And how long did he wait in reporting the claim?
I know the State Farm policy is different from the ISO but it follows the same line of thinking I believe. Do you know what policy we are talking about in this situation?
I see this as no different than a leaky pipe inside a wall. The carrier owes to make the repairs from the water damage but does not owe to fix the pipe. In this situation I think the carrier would owe to fix the water damage minus the mold and rot but not to fix the rock wall. Why would the rock wall need to be torn down to repair the damage? Couldn't the drywall be fixed from the inside? If the rock wall needs to be torn down to prevent future water damage that wouldn't be covered because it would be fixing a pre-existing defect in material or workmanship, which is not covered. |
Edited by - KileAnderson on 03/07/2004 14:28:21 |
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william s cook
53 Posts |
Posted - 03/07/2004 : 19:44:54
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Kile
The insured has a SF FP-7923 (12/90)
The language that you pointed out is exactly the same in the policy in effect. This in not a hypothetical claim and the insured's claim was denied. I appreciate your response to the question and it appears that you would have provided the insured with a different outcome from the results supplied by the handling adjuster as he denied the claim in it's entirety for the defective construction exclusion. We can note that the insured may now have to pay the exorbitant fee that I will charge him for assisting him in an attempt to convince the insurers that portions of the claim are covered. This is the type of loss that at first blush it would appear that the policy provides no coverage for the claim. It was not my intention to trick anyone as I indicated that it was a two-part question. This was how the client presented the claim to me. Probing a little deeper revealed that the water intrusion had damaged the interior of the wall. I am not sure what the response of insurers will be when the circumstances of the damage related to water intrusion is called to their attention. It appears that the adjuster may have failed to conduct a thorough investigation after determining the cause, and then applying the exclusion to all of the related damage without addressing the exceptions to the exclusions. I appreciate everyone’s comments and I concur that coverage for defective workmanship is not covered but any resultant damage attributable to the consequences of the defective workmanship may provide some payments to an insured if not excluded elsewhere in the policy.
William S Cook
Public Adjuster
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alanporco
USA
112 Posts |
Posted - 03/07/2004 : 20:37:20
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| Sorry Bill, the loss is not covered under most policies. I have no idea why Kile would equate the water damage to a leaky pipe. Hugh deference here. First and foremost is that the water entered through the EXTERIOR. A leaking pipe is within the perimeter of the structure and is a part of the insured structure. Water entering through the exterior is generally excluded unless there is first an opening ceated by a covered cause of loss. There are policies that do not exclude wind driven rain, somewhat rare but they do exist. Now, is faulty construction - the proximate cause of the interior water damage - covered? NO! The exclusionary language that will uphold the carrier's denial is usually in the exclusion regarding water damage and will state that no interior water damage is covered unless the structure first sustains damage from a covered cause of loss; i.e., wind blows the side of the house off or the wind blows over a tree which opens the structure to subsequent rains. There is no sudden accidental event in this case. |
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KileAnderson
USA
875 Posts |
Posted - 03/07/2004 : 21:45:41
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From what I read in the State Farm 7955 policy and what I've been told on numerous occasions, damage to Coverage A, the structure, is covered whether there is an opening created by a covered loss or not, Coverage B, contents, on the other hand, is only covered if there is an opening created by a covered loss. The only way the water wouldn't be covered is if it was ground water or if it came in as a SDB. This is unique to the State Farm policy.
I haven't worked very much lately with the 7923 as it has been phased out in most states and both the 7923 and 7925 have been replaced with the 7955. I believe the 7923 is more restrictive than the 7925. If I remember correctly the 25 had RC and GEC (guaranteed extra coverage). I haven't read the 23 in quite a while. It may not provide coverage for this loss.
Bill, did this water come in from above or did it come in from the ground? How much direct damage (excluding mold and rot) did the water do? If it's just some drywall and paint, it may not reach the deductible. Remember, even if the water damage is covered, the mold and rot isn't, no matter if there is a covered loss or not. Even if you are right, it may just be academic.
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Edited by - KileAnderson on 03/07/2004 21:57:57 |
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trader
USA
236 Posts |
Posted - 03/08/2004 : 04:43:58
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| This event is not covered, nor is the 2nd cause, water intrusion. The most basic of all exclusions is applicable. "the doctrine of non concurrent causations". Go back to the inland marine insurance text book and read the chapter on "risk of loss". |
Edited by - trader on 03/08/2004 05:25:08 |
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trader
USA
236 Posts |
Posted - 03/08/2004 : 05:36:01
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Question: Where is the building over water exclusions in most Homeowners Policy's?
Answer: In the state amendatory endorsment attached by the particular state. |
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Is it Covered?
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