What is the limit under the building and Personal property Coverage Form for debris removal

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...insurance plus $10,000 might be inadequate to cover a property loss plus debris removal cost fully, the additional $10,000 debris removal limit can be increased by any amount desired, for additional premium, using ISO form CP 04 15 (or its equivalent), which is entitled Debris Removal Additional Insurance.

The limit shown on the endorsement is the amount to which the coverage is increased, with the $10,000 of basic coverage included. It can be applied in addition to the smaller of: a) 25 percent of the amount of the claim paid plus the deductible; or b) the limit of insurance when it is exceeded by the sum of the property loss and the cost of the debris removal.

To illustrate, assume a $100,000 limit of insurance (sufficient to comply with the coinsurance requirement) with an additional debris removal limit of $10,000.

With a property loss of $50,000, debris removal coverage of $12,500 (25 percent) plus $10,000, or $22,500 is available, for a total possible payment for property damage and debris removal of $72,500.

But with a $90,000 property loss, $22,500 (25 percent) plus $10,000, or $32,500 becomes $122,500, when added to the $90,000 property loss.

This is greater than the insurance limit plus $10,000 ($110,000). Payment is limited to $110,000 for property loss plus debris removal costs.

Claims for debris removal expenses are payable only “if they are reported” to the insurer within 180 days after the date of loss. Note that the expenses must be reported, but not necessarily incurred, within that time. A contractor’s estimate given to the insurer for work not yet completed will satisfy this requirement.

However, we have seen cases where an insurer has taken exception to this, insisting that the work must have been completed within this time for coverage to apply. So an insured, with the 180-day deadline approaching and unable to complete the debris removal within that time, is well advised—besides giving notice to the insurer—also to seek an extension rather than argue the point while the adjustment is in progress. Many insurers will grant such an extension, given a good reason for the delay. While debris removal coverage will pay for pollution cleanup and decontamination of covered buildings and personal property, it does not apply to the cost to extract “pollutants” from land or water, or remove, restore or replace polluted land or water. Pollutant cleanup and removal is a separate additional coverage, discussed later in this article.

Do Individual Limits Apply?

The following question frequently is raised: In a severe loss involving two or more items of property coverage, how does the debris removal coverage apply—separately, to each item of coverage, or collectively over all items involved in the loss?

In cases where the limit of insurance for one item of coverage is exhausted but coverage is available under a second item, adjusters will sometimes attempt to apply the debris removal limits separately to each item.

For example, assume $100,000 of building insurance and $50,000 of personal property insurance with no deductible. A fire totally destroys the personal property and causes $30,000 damage to the building. Cost of debris removal is estimated to be $26,000 for the contents (which includes toxic...

What Is Debris Removal Insurance?

Debris removal insurance is a section of a property insurance policy that provides reimbursement for clean-up costs associated with damage to property.

Policies with a debris removal provision typically only cover debris resulting from an insured peril, such as charred wood or twisted metal from a building fire.

How Debris Removal Insurance Works

Debris removal insurance policies commonly have a cap on the amount of reimbursement that a policyholder can receive for debris removal costs. While policies typically have debris removal as a standard provision, the policyholder is often able to purchase additional coverage. The policy provision may also extend to the removal of hazardous materials that may cover the property but could exclude pollutants.

When calculating the many costs involved with repairing and replacing property after destruction or damage, the costs of removing the debris and cleanup are in addition to—rather than a part of—the value of the damaged property. As such, the impact on the total amount of the loss, and the coverage limitations on these costs in most standard property insurance policies, are frequently overlooked in arranging the coverage initially.

Key Takeaways

• Debris removal insurance coverage is not typically part of a property owner's basic property insurance.
• Debris removal claims must be entered within 180 days and should include an estimate from a licensed contractor.
• Coverage is usually limited to 25% of the insurer's liability for the direct property loss by a covered cause of loss.

Debris removal insurance coverage is usually offered as “additional coverage” rather than a part of basic property coverage. Coverage is usually limited to 25% of the insurer’s liability for the direct property loss by a covered cause of loss, plus applicable deductible (unless stated as otherwise in policy declarations).

A claim for debris removal is payable only if reported to an insurer within 180 days after the date of loss. Note that expenses must be reported, but not necessarily incurred, within that time. A contractor’s estimate should satisfy this requirement and it is important to get the full amount in writing to present to the insurer.

History of Debris Removal Insurance

Under the 1943 New York Standard Fire Policy and its predecessors, debris removal costs aren't mentioned as either covered or excluded. This gave rise to controversy, with some insurers routinely including these costs as a part of the claim settlement and others rejecting or resisting payment, contending that this cost was not a direct result of the loss, and, as such, not covered.

The policy provision may include the removal of hazardous materials, but not pollutants.

To clarify coverages, a debris removal clause was added to the forms attached to the standard fire policy. It simply stated that the coverage extended to include the cost of removal of the debris resulting from the property loss.

The debris removal coverage was within and did not increase, the limit of liability. Debris removal costs were not considered in determining compliance with the coinsurance clause of the policy; however, if a coinsurance penalty was found to apply, reducing the recovery of the property loss, customary adjustment practice was to apply the same limitation to the payment for debris removal.

Which of the following is not covered under the building and personal property coverage form?

What is removal of debris?

Which of the following perils are covered in the causes of loss basic form?

Which of the following is not a covered peril under the basic cause of loss form?