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Confronting conventional wisdom on builders risk: from named-insured status to concurrent causation

Bell, Mark M ; Dunn, Christopher S ; Costner, James H

Construction Lawyer, 2011, Vol.31 (4), p.15

Chicago: American Bar Association

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  • Título:
    Confronting conventional wisdom on builders risk: from named-insured status to concurrent causation
  • Autor: Bell, Mark M ; Dunn, Christopher S ; Costner, James H
  • Assuntos: Business interruption insurance ; Causality ; Causation (Tort law) ; Construction ; Construction companies ; Construction industry ; Endorsements ; General contractors ; Insurable risks ; Insurance ; Insurance claims ; Insurance coverage ; Insurance industry ; Insurance policies ; Laws, regulations and rules ; Liability insurance ; No-fault insurance ; Risk (Insurance) ; State court decisions ; Subcontractors ; Subrogation
  • É parte de: Construction Lawyer, 2011, Vol.31 (4), p.15
  • Descrição: As a side note, it bears observing that the term "additional insured" often causes confusion when used in builders risk policies. This term is generally a carryover from the liability context and is likely inapplicable in the builders risk context as many insurers will not issue "additional insured" endorsements on their builders risk policies. Thus, when practitioners are drafting insurance clauses, they should consider requiring the parties be added as "named insureds" or "additional named insureds" rather than "additional insureds." The current problem is exacerbated in some ways by current Accord Forms, which currently provide a general checkbox for "additional insureds."13 Under the concurrent causation analysis, insurers found themselves obligated to pay for "flood" and "earthquake" damages on policies that expressly excluded "flood" and "earthquake." For instance, in Safeco Insurance Co v. Motte, the trial court held that an exclusion for earthquake damage was clear, unambiguous, and valid.62 However, the trial court reasoned that slippage of tectonic plates - essentially what causes an earthquake - was not excluded. Because tectonic slippage contributed to the loss, the damage resulting from the earthquake was a "covered loss."63 Faced with this monumental potential liability, insurers modified their policies to protect their solvency. In addition to more expansive definitions of "earthquake" and "flood," ISO and others created new "anticoncurrent causation" exclusions. Typical exclusions read as follows: "we will not pay for any loss or damage caused directly or indirectly by any of the following. Such a loss is excluded regardless of any other cause or event that contributes concurrently or in any other sequence to the loss."64 The unabashed intent of the anticoncurrent causation exclusion was to "exclude a cause no matter how slight that cause may contribute to the loss."65 At the time, this was a reasonable response designed to protect the solvency of the insurance industry. "All risk," as applied to insurance policies, is a misleading and dangerous term for two primary reasons. First, "all risk" does not mean the same thing across jurisdictions. If an insurance policy were to truly include "all risks," then the policies would uniformly provide coverage across state lines. However, as demonstrated by the anticoncurrent language exclusions, the "all risk" policies provide vastly different coverage in different states. Second, one could argue that the standard "all risk" policy does not even cover "most risks"; indeed, the "all risk" policy often provides far less coverage than the standard "named peril" insurance policy. Today, an owner may in fact be better served by securing a named peril policy with express provisions of coverage rather than an "all risk" policy that is rife with express and hidden exclusions.
  • Editor: Chicago: American Bar Association
  • Idioma: Inglês
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