Absence of an exterior envelope or failure of a contractor to properly secure the exterior of the property
Part 2 of a 4 Part Series on Construction Weather Risk Management
By Gina Lozier and Jeffrey Wertman
This article was first published on Law360, A LexisNexis Company, and is republished here with permission of the authors.
Although a standard property insurance policy may provide some coverage for damages to a property under construction, the nature of a construction project and the vulnerability of the property during construction can increase the risk that the property is damaged during a hurricane and potentially allow an insurance company to avoid coverage if there is a material and substantial increase in the hazard that the insurance could not reasonably be presumed to have contracted to assume it.[1]
One of the most common examples which increases the risk of damage during a construction project is the absence of an exterior envelope or failure of a contractor to properly secure the exterior of the property. These factors can allow for an increased probability that the structure, and interior, will be more susceptible to wind and water intrusion.
Additionally, in recent years, many property insurance companies have incorporated provisions within the policy excluding damages to the interior of a building, unless the exterior of the property first sustains damage as the result of the direct force of the wind. These limitations are commonly referred to as “wind created opening” provisions and require an opening in the roof, windows or walls of a building which allows water to infiltrate the interior of the property.
Accordingly, an insurance company may have a valid defense to coverage for interior damage under such a policy for water damage which enters a property solely because the roof was removed during construction or repairs.[2] Further, if an insurance policy contains such a “wind created opening” provision, the property owner would likely have the burden to prove that the direct force of wind caused an opening which allowed water to enter the property.[3] The failure to meet this burden could result in an inability to recover funds from the insurance company for any interior or contents damage.
[1] Smith v. Peninsular Ins. Co., 181 So. 2d 212, 217 (Fla. 1st DCA 1965)
[2] New Hampshire Ins. Co. v. Carter, 359 So. 2d 52, 53 (Fla. Dist. Ct. App. 1978).
[3] Florida Windstorm Underwriting v. Gajwani, 934 So. 2d 501, 506 (Fla. 4th DCA 2005).
Gina Clausen Lozier and Jeffrey S. Wertman are partners at Berger Singerman LLP.
This article is for general informational purposes and is not intended to be and should not be taken as legal advice.
More in the next blog post about weather decision support, weather safety and weather risk management…
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