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The reply is “no.” But, precise coverage language and the relevant state legislation will play a big function in figuring out if protection is to use in circumstances of defective design and building.
A latest Washington appellate courtroom opinion1 held:
Faulty design and building of the Gardens Condominium roof meeting led to insufficient air flow, which trapped condensation and extra humidity, damaging the roof. Gardens held an ‘all-risk’ insurance coverage coverage issued by Farmers Insurance Exchange. The coverage excludes protection for defective building, however ‘if loss or damage by a Covered Cause of Loss results, [Farmers] will pay for that resulting loss or damage.’ Farmers denied protection for the roof repairs and Gardens sued. The trial courtroom granted abstract judgment for Farmers. Because the trial courtroom misinterpreted the ensuing loss clause in Farmers’ coverage, we reverse and remand for additional proceedings….
The “resulting” or “ensuing loss” exceptions to exclusions in property insurance policies are vital at any time when the lack of defective design and building contributes to a loss. These circumstances are a number of the most complicated protection determinations. Sometimes, the case details and coverage language are the identical, however the state legislation making use of to these may end up in totally different outcomes. So, policyholders ought to acquire authorized session anytime an insurer denies a declare primarily based on defective design and building.
I strongly counsel that these posts: Defective Construction and Ensuing Loss Provisions, and Whipped Cream, Honey and Covered Ensuing Loss Delights, are learn by these persevering with to learn this publish to achieve a greater understanding how the ensuing loss should match as an exception to the defective design and faulty building exclusions.
The cited Washington case is worthy of research. Some circumstances counsel that policyholders attempt to learn the following loss exceptions too broadly, thereby making the exclusions for defective design and workmanship meaningless. The Washington courtroom commented on this argument and turned it round:
And Farmers’ concern in regards to the ensuing loss clause swallowing the exclusion doesn’t bear out. The ensuing loss clause solely limits the scope of the exclusion. In distinction, if we had been to interpret a ensuing loss clause to use to solely impartial, unexpected coated perils, the clause can be superfluous. The coverage already covers unexpected impartial perils that it doesn’t in any other case exclude. See GMAC v. Everett Chevrolet, Inc., 179 Wn. App. 129, 135, 317 P.3d 1074 (2014) (we favor contract interpretation that doesn’t render language meaningless or ineffective).
The evaluation of the case legislation was very complicated, and the courtroom’s factual reasoning was easy:
Here, Gardens’ coverage excludes protection of defective building. That exclusion limits Gardens’ protection. But the ensuing loss clause narrows that exclusion. In the ensuing loss clause, Farmers agreed to pay for any loss or injury attributable to a coated peril ensuing from defective building. The events stipulated that ‘[t]he damage was caused by condensation and/or excess humidity resulting from inadequate ventilation of the roof assembly due to the faulty, inadequate, or defective construction, repairs and/or redesign.’ So, if the coverage covers the perils of condensation and extra humidity, it covers the loss or injury from these perils.
Again, these complicated circumstances beg for authorized opinion. Adjusters and policyholders ought to search authorized opinions when confronted with these circumstances as a result of the legislation varies considerably between states. Subtle variations primarily based on details and coverage language are vital.
Thought For The Day
For each complicated drawback there’s a solution that’s clear, easy, and incorrect.
—H. L. Mencken
1 The Gardens Condominium v. Farmers Ins. Exchange, No. 83678-1-I (Wash. App. Dec. 19, 2022).