Policy Doesn't Cover Loss Caused by Workmanship

[joshb]

There's really quite a bit that would go into this type of claim. I just read through a few policies and they all read almost word for word the same. I copied and pasted it below. The company I took that from denied a fairly large water claim last year and cited this exclusion. I don't know too much of the details with the claim, as I was not involved with it, but when it was denied it became a big deal with the customers lawyer and the carriers lawyers getting involved. I'll also add I'm in Florida, and the majority (95%) of the companies we write with are small "start-up" companies, and the wording in their policies differs between that of the "bigger" companies, and include quite a bit more with 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.
a. Weather conditions. However, this exclusion
only applies if weather conditions contribute in
any way with a cause or event excluded in
paragraph 1. above to produce the loss;
b. Acts or decisions, including the failure to act
or decide, of any person, group, organization
or governmental body;
c. Faulty, inadequate or defective:
(1) Planning, zoning, development, surveying,
siting;
(2) Design, specifications, workmanship, repair,
construction, renovation, remodeling,
grading, compaction;
(3) Materials used in repair, construction, renovation
or remodeling; or
(4) Maintenance;
of part or all of any property whether on or off
the "residence premises."
- - - - - - - - - - - - - - - - - -
I should also ask, are we comparing an HO5 and an HO3 policy form. Down here, we don't have any options (besides Chubb) for an HO5. All we write are HO3 and HO8 (only if HO3 isn't available). I would imagine the wording would differ between the two.

 

[bobson]

There's really quite a bit that would go into this type of claim. I just read through a few policies and they all read almost word for word the same. I copied and pasted it below. The company I took that from denied a fairly large water claim last year and cited this exclusion. I don't know too much of the details with the claim, as I was not involved with it, but when it was denied it became a big deal with the customers lawyer and the carriers lawyers getting involved. I'll also add I'm in Florida, and the majority (95%) of the companies we write with are small "start-up" companies, and the wording in their policies differs between that of the "bigger" companies, and include quite a bit more with 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.
a. Weather conditions. However, this exclusion
only applies if weather conditions contribute in
any way with a cause or event excluded in
paragraph 1. above to produce the loss;
b. Acts or decisions, including the failure to act
or decide, of any person, group, organization
or governmental body;
c. Faulty, inadequate or defective:
(1) Planning, zoning, development, surveying,
siting;
(2) Design, specifications, workmanship, repair,
construction, renovation, remodeling,
grading, compaction;
(3) Materials used in repair, construction, renovation
or remodeling; or
(4) Maintenance;
of part or all of any property whether on or off
the "residence premises."
- - - - - - - - - - - - - - - - - -
I should also ask, are we comparing an HO5 and an HO3 policy form. Down here, we don't have any options (besides Chubb) for an HO5. All we write are HO3 and HO8 (only if HO3 isn't available). I would imagine the wording would differ between the two.

You mean the denied the ensuing damage of the water claim?

 

[joshb]

Yes. the claim was not cut and dry, by any means, but they did not pay out even for the ensuing damages. They may have cited another exclusion as well, to be honest I don't remember, but I do remember the workmanship issue.

 

[bobson]

I must disagree now roboman on the Travelers policy. The 1986 version I looked at doesn't appear to have the exclusion but the current 2006 version does. The 1986 version only has one set of exclusions. The 2006 version lays out 2 sets of exclusions, set A and set B. Set B is basically what we are talking about with the ensuing language included.

This is a very interesting discussion.

 

[roboman]

I must disagree now roboman on the Travelers policy. The 1986 version I looked at doesn't appear to have the exclusion but the current 2006 version does. The 1986 version only has one set of exclusions. The 2006 version lays out 2 sets of exclusions, set A and set B. Set B is basically what we are talking about with the ensuing language included.

This is a very interesting discussion.

Bobson,
I'm not sure I follow you. My policy says "HO-3 (06-91)" in the bottom left corner. I also have endorsements that, I thought, would bring coverage equivalent to HO-5.

 

[bobson]

Bobson,
I'm not sure I follow you. My policy says "HO-3 (06-91)" in the bottom left corner. I also have endorsements that, I thought, would bring coverage equivalent to HO-5.

The new policy they are using my state is the (10-06) version. They have updated it to include the Erie type exclusion.

 

[roboman]

Wow. I can see where this can really create some problems.

Example 1:
A homeowner is covered by a policy with a workmanship exclusion as far as ensuing damages go. Years later his policy is changed or he gets a new policy that does not cover ensuing damages. Faulty wiring causes a major fire that destroys the home and it is blamed on workmanship that was done prior to the new or changed policy. Is the homeowner SOL?

Example #2: As above but it's the same policy in place w/o an ensuing damages clause but lost in the fire are the receipts and copies of the electricians insurance policy. Again is the homeowner SOL? Are homeowners expected to keep receipts and contractors insurance policy documents in a safe…..forever?

This seems ridiculous. The whole point of insurance is so you can sleep at night and not worry about which lawyer you may need to hire to fight your insurance company.

It should be mandated that homeowner insurance covers all ensuing damage provided that the homeowner took reasonable care to see that the work was properly done (i.e. licensed electrician, inspections, etc). Period. Anything else is pretty worthless if you ask me.

Anyone know of policies that have ensuing loss provisions?