Is Building Damage Covered from Nearby Implosion?

An insured’s commercial building is in close proximity to a construction site. The construction team performed a partial implosion of some cranes. The insured’s building then started having issues with roof leakage and it was discovered that the implosion caused the building’s bricks to shift and gutter system tie-ins to become separated, which resulted in damage.

Q: Is there coverage for the damaged property caused by the crane implosion under the insured’s CP 00 10 04 02 form? 

Response 1: Fortunately, you have the CP 10 30 10 12 form, a special form policy covering most perils except those specifically excluded. Turn in a claim to the carrier and let them tell you why it is not covered.

The insured does not have the responsibility to prove there is coverage as they would under a named perils coverage form. The responsibility is on the carrier to show the insured where in the policy the cause of loss is excluded. It is important you do not try to make a coverage determination—let the carrier do their job.

The insured may also want to contact an attorney to see if there is the potential for third-party action against the entity that imploded the cranes. 

Response 2: I’m sorry to say that I can’t see any first party property coverage under the form. The earth movement exclusion excludes the damage to the insured’s building, which does not sound like a “collapse.” The best approach may be to enlist experts in asserting that the damage was caused by work at the construction site and filing a claim against those involved in that project.

Response 3: Turn the claim in and see what the carrier says. If they pay it, no problem. If not, then we can evaluate the basis for the denial. They are using an old ISO form. If they had the current earth movement exclusion, coverage is debatable. With the old language, I don’t see an unarguable exclusion.

Response 4: If the insured can substantiate that the damage was caused by the implosion, a liability claim against those parties would be the best route.

This question was originally submitted by an agent through the Big “I” Virtual University’s (VU) Ask an Expert Service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.