Mitigating or Preventing Water Damage

Kevin Moore | Woodruff Sawyer

Water’s capacity to inflict severe and costly damage looms large over all construction projects. Whether it’s caused by Mother Nature or human error, water damage presents a ubiquitous threat. Because construction water damage claims can climb to hundreds of thousands of dollars, it’s worth taking steps to mitigate or prevent incidents, if possible. The cause of water damage largely dictates how an insurance policy responds to a construction-related claim. Losses can include property damage, debris removal, delayed costs, lost profits, and more.

Heavy duty crane truck construction site
The Two Major Sources of Water Damage

Construction site water damage threats exist both within a project itself and from external factors, such as the weather. Rain is the most likely external factor that can cause water damage, as it may get into any exposed or unfinished area and damage the structure and equipment.

Internally, faulty installation, physical defects, or incidental construction damage may cause bursting or gradual leaking in plumbing and sprinkler systems. Accidents are also a possibility; projects sites are naturally busy with lots of moving parts. Workers may accidentally damage a water source or puncture a pipe through a wall. Whether water damage is caused by internal or external events, costly project delays can be expected in the wake.

Keep an eye out for typical internal risk factors, including:

  • Uncovered building openings
  • Water delivery/drainage/sprinkler system failures
  • Subsurface drainage problems
  • Building envelope system deficiencies
  • Site draining problems
Identifying Water Damage Risks

A construction site’s risk exposure rises with every inch of water system it contains. The more water sources there are nearby, there is a greater risk of exposure. Each source, drain, and potential problem should be identified before construction begins.

Be aware that even the smallest design flaw—in the water systems or the building itself—can allow water to spread quickly through a construction site.

Try to identify the potential for two kinds of common construction water problems:

  • Busting pipes
  • Gradual leaks

Piping system failure is one of the most common and destructive causes of water damage. Older pipes are particularly at risk, so they should be attentively maintained and tested.

External factors may also lead to pipe bursting. For example, freezing temperatures can cause ice to build up in pipes, and ice build-up can cause pipes to burst. Earthquakes are another external threat. Facilities in earthquake-prone areas (like California) should prepare for leaks and breaks by ensuring piping components are sway-braced.

Gradual leaks might be less noticeable when they occur, but they can cause significant damage if allowed to continue. Frequently monitor for leaks of any size and address the root issue as soon as possible.

Understand Your Insurance Policy

Prepare for water damage to your construction site by carefully reading your insurance policy to discern what coverages, deductibles, and limits apply. Remember that a policy’s response to the claim is contingent on the source of the water damage. Notably, a policy will typically differentiate between damage caused by a flood and damage from other sources, including on-site leaks. Make sure you understand how flooding is defined and fits into the coverage.

Mitigation Process


Perform a constructability review to identify and eliminate design failures that potentially could cause water damage.

  • Evaluate contract documents and insurance policy language.
  • Evaluate specified materials/systems and how they will interrelate.
  • Evaluate the site for water drainage.
  • Ensure the drainage of water away from the structure and planned excavations when performing site planning and preparation.

Schedule the installation and testing of piping systems, such as hydronic systems, as early as possible in the project.

During Construction

Remain aware and identify potential problems that may lead to water damage.

  • Properly supervise work of subcontractors.
  • Perform quality control checks.
    • Identify and resolve potential water issues quickly.
  • Mock-up all critical waterproofing systems in advance.
    • Test areas of the mock-up that are prone to water infiltration and ensure any issues are addressed.
    • Schedule a mock-up review meeting with project personnel to discuss potential waterproofing issues.
    • Schedule a meeting to discuss critical building system details and inspection concerns.
    • Include mock-up approval as an activity in the schedule.
  • Develop a severe weather plan that assigns responsibilities for securing the site and mitigating any water damage. The plan should address:
    • Take steps to secure and shield the site in the event of a rainstorm.
    • Develop a specific and detailed response plans for each potential weather threat.
  • Perform a final inspection and pressure test immediately before charging piping systems with water even if the system has previously passed a hydrostatic test.
    • Piping systems may be altered either intentionally or unintentionally, resulting in a water release upon charging. The pipes should routinely be inspected and approved before charging.
  • Protect excavations from the accumulation of water which can potentially infiltrate the structure, alter the moisture content of affected soils and/or undermine the foundations.
  • Maintain backup storage plans for water-sensitive materials and equipment.
Post Construction
  • Address construction defects.
  • Maintain a quick-response team for warranty issues. Any water issues should be resolved within a maximum of 48 hours or sooner, if possible.

Most threats of water damage to your construction site can be prevented. Take the cautionary steps, including knowing the most likely threats, both catastrophic and small, and identifying internal and external sources of water damage. Further, it’s important to understand your insurance policy and how it responds to various claims.

Staying a step ahead of water damage threats can save time and money for your construction project. While you can’t eliminate every risk, you’ll mitigate the vast majority of them.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email

Product Liability Economic Loss Rule and “Other Property” Damage

David Adelstein | Florida Construction Legal Updates

One of the best defenses a manufacturer has, particularly in non-personal injury cases, is the economic loss rule.  Lo and behold, a recent opinion out of the Middle District of Florida, Dero Roofing, LLC v. Triton, Inc., 2022 WL 14636884 (M.D.Fla. 2022), touches on this very subject with cogent analysis regarding “other property” damage for purposes of the economic loss rule.

In Dero Roofing, a roofing contractor repaired hurricane damage to roofs of condominium buildings. The roofing contractor became a certified applicator of the manufacturer Triton’s products. After the roofer applied certain products with a sprayer, the products “streaked down the roof tiles onto ‘the exterior and interior of the [Condos], including penetration of the residents’ screens, gutters, and other related areas.”  Dero Roofing, supra, at *1.  The roofing contractor obtained an assignment of the condominium’s claims and sued the manufacturer and distributor of the (Triton manufactured) products.

The defendants moved to dismiss under the economic loss doctrine.

The economic loss doctrine “prohibits tort recovery when a product damages itself, causing economic loss, but does not cause personal injury or damage to any property other than itself.”  Dero Roofing, supra, at *3 (quotation and citation omitted).

Well, what is other property?  The Dero Roofing opinion explains.

When a defective product is ‘an integral or component part’ of a larger item, then damage to the larger item ‘caused by this component part was not damage to separate property.’  As the rationale flows, a component becomes part of the purchased product, so they are one.  If nothing else was damaged, therefore, the economic loss rule applies because there was no damage to other property.

To qualify as other property, there must be damage to something ‘unrelated and unconnected to the product sold.’ In other words, ‘there is no privity between the owner of the property damaged and the distribution chain for the product causing the damage.’  And, crucially, ‘The character of the loss determines the appropriate remedies.’  That’s lawyer-speak for saying ‘one must look to the product purchased by the plaintiff, not the product sold by the defendant.’

Dero Roofing, supra, at *3 (internal quotations omitted).

Based on this definition of “other property” for purposes of the economic loss doctrine, the trial court held the economic loss doctrine applied to bar most of the plaintiff’s claims:

[The roofer] applied [the manufacturer’s products] to the roofs.  They were component parts of each respective roof.  And notably, the Condos presumably paid for completed roofs, not individual parts that could later make up a roof.  In short, [the roofer] cannot bring a products liability action for damages to the roofs because those theories are barred by the economic loss doctrine.

Dero Roofing, supra, at *4.

However, since this was at the motion to dismiss stage, the court is allowing, in a limited capacity, certain arguments relating to one of the products to move forward, but with an important analysis (caveat) that is prudent analysis for anyone dealing with a products liability claim relating to damage to “other property”:

This case is still at the pleading stage (when the Court must accept well-pled allegations as true and view them most favorably to Dero [the roofer]).  In part, Dero alleges the Condos suffered damage to their screens. As the Court understands it, TritoCryl [one of the producs] oozed below the roof onto either the window or lanai screens—damaging those screens and potentially whatever was beneath or inside them. There are no allegations to suggest the screens were anything but other property for the purposes of the economic loss rule. Specifically, nothing implies the screens were connected in any manner to the roofs or their repairs. So at this time, Dero plausibly alleged damage to other property of “the exterior and interior of the buildings, including penetration of the residents’ screens, gutters, and other related areas.”

To be sure, the damage as it relates to the gutters plus “exterior and interior of the buildings” (which the Court assumes could mean fascias, soffits, and walls) is a much closer call than the screens. While it leaves final resolution for another day, the Court notes an inclination to conclude this is not other property. Gutters, fascias, and soffits may be part of a complete roof (i.e., what the Condos bargained for). What’s more, the wall immediately adjoining the roof beneath a soffit would seem intimately connected with the roof. So the economic loss rule might eventually bar these types of damages too. But there is no need to step out on a limb over these matters today given the impossibility of concluding the screens weren’t other property on these allegations.

One final point. Even for the screens, ownership of that property might doom Dero’s claims. In Florida, it is settled that plaintiff must own the “other property.”  Again, the Complaint does not clarify who owns the screens. If individual residents are the property owners, then Dero (through the Condos) cannot claim that as damage to other property. But that is a factual issue well outside the pleadings to resolve at a later stage.

Dero Roofing, supra, at *5.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email

Colorado Federal Court Confirms Consequetial Property Damage, But Finds No Coverage for Subcontractor

Tred R. Eyerly | Insurance Law Hawaii

      A recommended decision from the Magistrate Judge of the Federal District Court for the District of Colorado found there was no coverage for the subcontractor’s faulty workmanship, but recognized that Colorado finds consequential damages to be property damage. Indian Harbor Ins. Co. v. Houston Cas. Co., 2022 U.S. Dist. LEXIS 117857 (D. Colo. July 5, 2022). 

    The insured, Tripp Construction, was a subcontrator for contructing balconies at an apartment complex. The owner complained that Tripp failed to properly install balconies.  The defective installation of certain balcony components damaged other, non-defective components. 

    The general contractor had an OCIP policy issued by Houston Casualty Company (HCC). The general contractor also had a Subcontractor Default policy issued by Indian Harbor.

    When the apartment owners complained about the balconies to the general contractor, the general contractor submitted a claim to HCC. Coverage was denied becasue there was no “property damage.” HCC determined the claimed damage was only to defective work itself. 

    Subsequently, additional claims regarding the balconies were submitted to HCC. Indian Harbor argued that the aditional damage included “damage to the underside of the balconies, soffits, and traffic coating,” thereby constituting property damage. HCC again denied the claims because there was no evidence of additional alleged damage.

    Indian Harbor sued HCC and moved for summary judgment. Indian Harbor argued there was property damage caused by an occurrence, which extended to all damage resulting from faulty work. HCC cross-moved for summary judgment and aruged that because the balcony was defetive, all damage was to already defective property. 

    The court held that a subcontractor’s defective work and damage to its own defective work product was not “property damage.” To trigger coverage, the deficient performance had to result in damage to nondefective third-party work product. In other words, injuries flowing from improper or faulty workmanship constituted an occurrence so long as the resulting damage was to nondefective property. 

    The court found that the subcontractor had to fix its defective work product, even though not every aspect or component of its installation was deficient. The CGL policy did not provide coerage for such repairs. The mere fact that the soffits on the balcony were not defective but must be replaced as part of remedying other defects did not bring the damage within the coverage of the CGL policy. 

    Here, Indian Harbor could point to no damage to the doors from the apartments into the balcony, exterior paint, etc. All damage to the defective balconies, includng damage suffered as a result of remediation or repair efforts, was damage to the subcontractor’s own defective work. Accordingly, the Magistrate Judge recommended that Indian Harbor’s motion for partial summary judgment be denied and HCC’s cross-motion to show the absence of a genuine dispute of material fact as to the existence of “property damage” be granted.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email

No Duty to Defend Under Homeowner’s Policy Where No Occurrence, No Property Damage

Tred R. Eyerly | Insurance Law Hawaii

    The federal district court for the district of Hawaii granted the insurer’s motion for summary judgment determining there was not duty to defend and no duty to indemnify the insured under a homeowner’s policy. Allstate Ins. Co. v. Rosfeld, 2022 U.S. Dist. LEXIS 139123 (D. Haw. Aug. 4, 2022). 

    The insured homeowners were sued in the underlying case for alleged failure to disclose poor flooding and plumbing issues during a December 2016 sale of the residence on Kauai. The disclosure statement purportedly made false representations and omitted material facts regarding various issues with the residence. The disclosure statement noted no sewage, drainage, water-related, or grading problems on the property, no damage to structures from flooding or leaks, no defects in the foundations or slabs, and no defects in the interior walls, baseboards or trim despite the insureds having experienced such issues during their ownership. The underlying complaint further alleged that the property had a history of drainage problems dating to 2006 and 2007, which the insureds knew about, or should have known about, when completing the disclosure statement. The insureds made a claim with Allstate in 2014 under their flood and homeowners policies for flooding or seepage into the basement of the house.

    The insured tendered the underlying lawsuit to Allstate, who defended under a reservation of rights. Allstate then filed this suit in federal district court for a declaration that it had no duty to defend or indemnify the insureds. Allstate moved for summary judgment.

    The court determined there was no property damage alleged in the underlying suit. The complaint alleged that after they moved in, the plaintiffs discovered “numerous cracks in the concrete slab (many of which appeared to be covered with concrete caulk or liquid filler.” The negligence claims in the underlying case were based on the insureds’ failure to disclose the repairs, not that the repairs were negligent and caused further property damage. 

    There was also no “occurrence” alleged in the underlying case. The underlying complaint alleged that the insureds’ actions or omissions were entirely intentional, not accidental. The underlying complaint alleged that the insureds knew about flooding and plumbing defects – for example, having warned a neighbor about them and having made an insurance claim for certain damages  – prior to selling the property, and yet failed to disclose those material conditions. Accordingly, Allstate owed no duties. 

    The insureds’ cross-claim for bad faith was also dismissed. The insureds produced no evidence of bad faith to create an issue of fact at the summary judgment state. 

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email

Failure to Allege Property Damage Within Policy Period Defeats Insured’s Claim

Tred R. Eyerly | Insurance Law Hawaii

    The insured’s inability to determine when water damage occurred meant it could not pursue claims of property damage against the insurers. Creek v. State Farm Fire & Cas. Co., 2022 U.S. Dist. LEXIS 116939 (W.D. Wash. July 1, 2022). 

    Gold Creek Condominium complex experienced water damage. The complex was completed in 1982. The owners sued State Farm and Travelers under all-risk policies when tenders for the damage were denied. 

    In 2017, Creek hired an expert to investigate deterioration due to water intrusion. The expert noted that “water intrusion had been evident in the exterior walls, soffits, terraces, handrails and elevated entry walkways for some time.” Thereafter, Creek tendered claims for property damage to State Farm and to Travelers.

    In January 2020, a joint exploratory investigation was conducted with representatives from Creek, State Farm and Travelers participating. Exploratory opening were that the gypsum sheathing could be seen. Only one of the openings did not have water damage to the gypsum and it was in an area that was sheltered from wind-driven rain. 

    State Farm’s expert found improper construction of the exterior walls and failure to adequately maintain the building enclosure system at the exterior walls led to rainwater infiltrating in during the frequent rainfall. Creek’s expert opined that water intrusion, in the form of rainwater events, including wind-driven rain, was the primary causes of the water damage. At a deposition, Creek’s expert acknowledged that he could not look at deteriorated gypsum sheathing plywood siding or wood framing and develop an opinion as to how long it took to deteriorate. Finally, Travelers’ expert opined that the original construction deficiencies, poorly implemented repairs, inadequate maintenance, and genenal wear and tear had contributed to ongoing water infiltration at the exterior walls, walkways, and decks. Based on these reports, both State Farm and Travelers denied coverage.

    Creek filed suit for breach of contract and all parties moved for summary judgment. The court granted State Farm’s motion based upon the one-year limitations provision of the policy. It stated that no action could be brought unless within one year after the occurrence causing loss or damage. “Occurrence” was defined as “an accident, including continuous or repeated exposure to conditions, which results in property damage. Therefore, Creek had to demonstrate the damage occurred during the policy period of 1989 to 1990, or not more than one year after the wind-driven rain caused the loss. The language of the policy did not depend on when the loss happened but when the “occurrence causing the loss’ happened.” The evidence did not give an reliable date of when the loss or damage occurred, so the policy was not triggered. 

    Travelers’ motion also argued Creek could not prove that covered physical damage “commenced” during the policy’s effective period. The policy provided that “Travelers will cover loss or damage commencing . . . during the policy period shown in the Declarations.” Creek failed to identify instances of new damage during the Travelers policy’s period to trigger coverage. Therefore, Travelers’ motion also granted.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email