Interpreting Insurance Coverage and Exclusions: When Sudden means Sudden and EIFS means Faulty
June 15, 2020 —
Ben Volpe - Colorado Construction Litigation BlogEIFS, or Exterior Insulation and Finish System, is an integrated exterior insulation and synthetic stucco system, praised for its energy efficiency.[1] However, EIFS has come to be well known in the construction defect world as placing homes at risk due to a lack of a built-in moisture management system. Before long, insurance companies recognized the risk and began explicitly excluding coverage for EIFS-related damage. However, EIFS exclusions have not always been so clearly set forth in some policies, causing insurance coverage litigation.
Recently, a Greenwood Village couple, Mark and Susan Mock, lost this fight.
Built in 1994, the Mocks’ home was constructed with an EIFS system. The Mocks carried a homeowner’s insurance policy through Allstate, which covered “sudden and accidental loss” to property, but excluded coverage for “planning, construction or maintenance” issues. Such “planning, construction or maintenance” exclusions included “faulty, inadequate or defective designs.”
A few months after a hailstorm, the Mocks discovered moisture-related damage to their home’s EIFS system. They reported the damage to Allstate, but Allstate would not cover it, reasoning that the damage to the EIFS system was excluded as a design and/or construction failure, and thus not covered as a “sudden and accidental” loss. The experts who evaluated the damage concluded it was the result of inherent flaws in the EIFS systems common in the 1994 timeframe, which involved long term moisture intrusion behind the cladding and no means for the water to escape.
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Benjamin Volpe, Higgins, Hopkins, McLain & Roswell, LLCMr. Volpe may be contacted at
volpe@hhmrlaw.com
Low Interest Rates Encourages Homeowners to become Landlords
June 18, 2014 —
Beverley BevenFlorez-CDJ STAFFCNN Money reported that more homeowners are deciding to keep their homes rather than sell, and become landlords instead. "Clients tell us all the time, 'We're never going to sell our home, even after we buy a new one,'" Glenn Kelman, CEO of the brokerage, Redfin, told CNN Money.
“The math works in most landlords' favor these days,” according to CNN Money. “Rents have risen by about 20% nationwide since mid-2006, the housing bubble peak, while home prices are still about 21% below what they were at that time.”
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New Jersey School Blames Leaks on Construction Defects, May Sue
January 28, 2013 —
CDJ STAFFThe Carlstadt Board of Education recently commissioned a investigation into the water leaks at Carlstadt Public School. The report has not been released in full, but redacted board minutes make reference to "a lack of waterproofing, drainage and clogged or buried weep holes." The investigation is ongoing and the board's business administrator, Pamela Baxley, states that its "ability to recover damages in potential litigation may be impacted should this information be released prior to the conclusion of their investigation."
The building in question opened in April 2007, and the leaking began that October. The contractor has fixed leaks, but further leaks have occurred.
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Mental Health and Wellbeing in Construction: Impacts to Jobsite Safety
August 16, 2021 —
NAHB - NWFA and Hardwood Floors MagazineThis article originally appeared in the National Wood Flooring Association's Hardwood Floors Magazine.
In the construction industry, workplace safety efforts have often focused on eliminating the most-common causes of on-the-job accidents, such as falls, being struck by or caught in-between objects, electrocutions, or being exposed to hazardous chemicals and substances. For more than two decades, the National Association of Home Builders (NAHB) has been at the forefront of enhancing physical safety and health in residential construction. NAHB takes proactive steps to keep members and affiliated state and local associations informed and educated about safety and health issues and trends affecting the building industry, including developing safety and health resources to help builders and contractors operate safe jobsites and lower workers’ compensation costs.
However, we recently have learned that construction workers are particularly susceptible to mental health issues and suicide – which is a silent killer in construction, and we know that the home building industry is not immune to the issues in the construction industry at large. We also know that industry associations have a role to play in promoting the importance of worker health and well-being to their member organizations. Helping to create sustainable workplaces and healthy, thriving professionals strengthens the industry and deepens the volunteer leadership bench. In addition to the benefits to the association, workplace well-being is good for employee health and retention, may reduce the cost of insurance, sick time, and employee turnover, and increase productivity. This can be accomplished by addressing mental well-being as part of overall safety – both physical and psychological.
How big is this problem of mental health and suicides in construction? According to the Centers for Disease Prevention and Control (CDC), the construction industry has one of the highest rates of death by suicide compared to other industries. In 2017, the suicide rate for construction workers was 53.3 per 100,000 workers, which is nearly five times greater than the rate for all fatal work-related injuries in construction (9.5 per 100,000 workers) from the physical hazards companies focus on eliminating.
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NAHB
Gen Xers Choose to Rent rather than Buy
February 05, 2014 —
Beverley BevenFlorez-CDJ STAFFDavid Crowe reported in Big Builder that the rate of home purchases by Gen Xers is low due to “challenges” they face caused by the recent recession. According to the article, “The headship rate rises from 16 percent to 48 percent in this age group—known as Generation X—as they finish college and become financially independent. There are 42.5 million people in this age range, and they are followed by 43.9 million in the 15 to 24 age cohort.” However, the recession forced many Gen Xers to postpone “independent living, marriage, and children. Birth rates hit all-time lows in 2012 (half the level of the baby boom), and marriage rates are the lowest they’ve been in a century.”
Unemployment seems to be the major factor in why many Gen Xers are choosing to live with parents or rent instead of buying a home. Crowe stated, “Young adults continue to express the goal of owning their own homes, but many are faced with challenges such as job availability, tight credit standards, inadequate savings for a down payment, student debt, and careers that are likely to require moves.” However, the “employment picture is expected to improve.”
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Construction Contract’s Scope of Work Should Be Written With Clarity
March 06, 2023 —
David Adelstein - Florida Construction Legal UpdatesThe scope of work section in your construction contract should never be overlooked. In numerous instances, it is overlooked which leads to a dispute as to the precise nature of the scope of work. This dispute could be the result of an ambiguity in the scope of work section. Or it could be the result of an omission. Or it could be the result of a lack of clarification. Or it could be the result of not properly reviewing and vetting the scope of work section. This is a section—whether included in the body of your contract or attached as an exhibit—you absolutely, positively want clarity. Otherwise, you are potentially setting yourself up for a future dispute that could include (i) an additional work / change order dispute, (ii) an incomplete work dispute, or (iii) a failure to properly perform your work dispute. These are all disputes you want to avoid, and many times can avoid, by going through and negotiating the scope of work section to bring clarity to this section. Remember, clarity is a positive. Ambiguity or uncertainty is a negative.
An example of such an avoidable scope of work dispute can be found in All Year Cooling and Heating, Inc. v. Burkett Properties, Inc., 2023 WL 2000991 (Fla. 4th DCA 2023). Here, an air conditioning contractor was hired to install six new split air conditioning systems. The scope of work provided that there were currently “two split systems that are currently existing, working perfectly and are not to be replaced as part of this contract.” The property manager claimed the air conditioning contractor was required to bring these two existing split air conditioning systems up to code as the contract provided that notwithstanding anything to the contrary, the contractor “will certify and shall ensure that all split systems in the building, upon completion of all the work, will be fully compliant with all codes and regulations and shall be responsible for any costs relates to the implementation and/or remediation of same.”
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Contractors: Consult Your Insurance Broker Regarding Your CGL Policy
February 15, 2018 —
David Adelstein – Florida Construction Legal UpdatesContractors: do yourself a favor and consult your insurance broker regarding your commercial general liability (CGL) policy. Do this now, especially if you subcontract out work.
CGL policies contain a “your work” exclusion. The CGL policy is written such that it excludes “‘property damage’ to ‘your work’ arising out of it or any part of it and included in the ‘products-completed operations hazard.’” This exclusion will be raised in the post-completion latent construction defect scenario. (There are other exclusions that will be raised to a defect discovered during construction.) Certain policies will contain a subcontractor exception to this “your work” exclusion. You WANT this exception- no doubt about it so that this exclusion does not apply to work performed by your subcontractors. Without this subcontractor exception, truth be told, this “your work” exclusion is a total back-breaker to contractors. It will give your insurer an immediate out for many latent defect property scenarios since excluded from coverage is property damage to your work including work performed by your subcontractors.
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David Adelstein, Florida Construction Legal UpdatesMr. Adelstein may be contacted at
dadelstein@gmail.com
Insurer Must Cover Construction Defects Claims under Actual Injury Rule
March 01, 2012 —
Tred R. Eyerly - Insurance Law HawaiiThe Texas Court of Appeals held that the insured need not prove the exact dates physical damage occurred in order to trigger defense and indemnity coverage. Vines-Herrin Custom Homes, LLC v. Great Am. Lloyds Ins. Co., 2011 Tex. App. LEXIS 10027 (Tex. Ct. App. Dec. 21, 2011).
In 1999, the insured built a home. He was insured under a CGL policy issued by Great American from November 9, 1998 to November 9, 2000. Thereafter, the insured held a CGL policy issued by Mid-Continent from November 9, 2000 to September 18, 2002.
After construction was completed, the insured sold the house to the buyer in May 2000. After moving in, the buyer found numerous construction defects in the home, including water entering cracks in the home, and sinking and sagging of parts of the house. The buyer sued the insured, who sought coverage under the two policies. When the insurers refused to defend the underlying suit, the insured sued for a declaratory judgment.
The underlying case went to arbitration and an award of $2.4 million was granted to the buyer. The insured assigned to the buyer his claims against the insurers.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
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