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

When Are General Conditions and General Requirements Covered by Builder’s Risk

Michael V. Pepe and Grace V. Hebbel | Saxe Doernberger & Vita

General conditions and general requirements are terms of art in the construction industry that describe the indirect costs necessary to complete a construction project. After physical loss or damage to a project, the following question often arises: Are “general conditions” and “general requirements” covered under a builder’s risk policy?

General Conditions vs. General Requirements

General conditions are usually described as the cost of managing a construction project. Examples include salaries for personnel like project managers, supervisors, engineers, field office staff, as well as the cost of field trailers, office equipment and supplies, and anything necessary to support the staff.

General requirements are the non-management indirect costs of executing the project, including items such as pre-development costs, permits, security, dumpsters, fences, temporary lighting, worker amenities, and clean-up costs.

These costs may be distinguishable from the costs of labor and material that directly goes into the completion of a construction project, but they are still necessary costs required to complete the work. These hard costs are often referred to as “brick and mortar” costs because they include tangible elements that are physically part of the project and other essentials. While coverage for hard costs are clearly included by a builder’s risk policy, sometimes it may be less than clear whether the general conditions are covered, and if they are covered, whether they qualify as a “hard cost” or a “soft cost.”

Builder’s Risk and Hard Costs

Builder’s risk policies are designed to cover damage to the project itself, including materials, supplies, fixtures, machinery, and equipment being used in connection with the project. For example, builder’s risk covers all physical loss or damage resulting from events such as fire, vandalism, hurricanes, and other perils. Property typically covered under builder’s risk policies includes buildings, structures, materials that will form a permanent part of a structure, materials in transit, materials in storage, foundations, excavations, permanent fencing, and permanent fixtures.

Depending upon the language in the particular insurance policy at issue, other hard cost expenses may also qualify for coverage. The problem is that many builder’s risk policies do not define covered hard costs or soft costs in a clear and unambiguous way. They often do not define or identify “general conditions” The specific language of a policy can determine what costs are considered covered losses, and the cases involving these issues are very fact specific.

The distinction can be important even if general conditions are clearly covered because different sub-limits and deductibles can apply to coverage for different categories such as repair costs, expediting expense, contractors extra expense, and delay in completion.

Two Different Outcomes from Two Cases

In Zurich Am. Insurance Co. v. Keating Bldg. Corp.,1 the contractor sought coverage under an all-risk builder’s risk policy for increased cost of completing the project after a collapse. Zurich refused to pay for (1) “Extended General Conditions” (e.g., administrative costs, trailers, supplies and other costs that are not captured as direct charges, (2) “Contractor’s Delay” charges (e.g., costs and expenses such as idle labor and equipment, that was incurred before construction could begin); and (3) “Storage, Price Increased, Etc.” (e.g., increases in labor wages and building material costs, as well as storage costs that would not have been needed but for the collapse). Zurich argued that these “additional costs” were not covered by the policy, and even if they were covered, were excluded by the provision addressing “consequential losses, damages and expenses.”

The Court ultimately found all three categories of additional costs were covered by the all-risk builder’s risk policy, which covered “all fortuitous losses that an insured peril proximately causes unless an exclusion applies.” In construing the policy language, the court held that the term “property lost or damaged” referred to the entire structure, not simply the location of the collapse. As a result, the grant of coverage was not limited to repairing the collapsed portion, but also included the increased costs to construct the remainder. The court noted that other Zurich policies refer to losses required to “rebuild, repair, or replace such part of the property . . . as has been damaged or destroyed” but the policy in question did not contain similar limiting language.

By way of contrast, in the 2008 case of Oceanside Pier View, L.P. v. Travelers Prop. Cas. Co. of Am.,2 the United States District Court for the Southern District of California held that increased costs of construction were not included in the grant of coverage. The court based its decision on the language of the policy which said the insurer “will pay for ‘loss’ to Covered Property from any of the Covered Causes of Loss.” The policy defined “Covered Property” as “Builders Risk,” and defined “Builders Risk” as:

Property described in the Declarations under “Builder’s Risk” owned by you or for which you are legally liable consisting of:

a. Buildings or structures including temporary structures while being constructed, erected or fabricated at the “job site”;

b. Property that will become a permanent part of the buildings or structures at the “job site”:

(1) While in transit to the “job site” or temporary storage locations;

(2) While at the “job site” or at a temporary storage location.

The Oceanside court held the “Builders Risk” provisions plainly provided coverage for losses resulting from the direct physical loss of buildings or structures being erected on the property but did not include coverage for increased costs of construction materials and labor to construct never-before constructed portions of the project.

In reaching its conclusion, the court also relied on the policy’s description of how to value covered property. The policy stated: “Covered property is valued as the least of (a) the cost to replace the covered property with other property, (b) the cost of reasonably restoring the property to its condition immediately before loss, or (c) the cost to replace the covered property with substantially identical property.” The court pointed out that this description did not contemplate coverage for increased costs of constructing buildings or portions of buildings which were not yet constructed at the time of delay.

The Bottom Line

The conflicting results in the Keating and Oceanside decisions can be explained by the differing language in the policies. While Keating’s grant of coverage did not contain limiting language on the types of risks covered by the policy, Oceanside’s did. The Oceanside policy only covered loss to buildings or structures while being constructed.

In contrast, the Keating policy covered “risks of direct physical loss . . . from perils not otherwise excluded.” Increased costs of construction for structures not yet completed at the time of the loss, though not a “loss to” “Buildings or structures while being constructed,” are a “risk of direct physical loss from a peril not otherwise excluded.” The language of the respective policies likely drives the opposite conclusions.

Policyholders should carefully review their policies when submitting a claim. They should be sure to consider whether general conditions are covered, and under what section of the policy they are covered.  

For more information, contact Michael V. Pepe at or Grace V. Hebbel at


1513 F. Supp. 2d 55 (D.N.J. 2007)

22008 WL 7822214 (S.D. Cal. 2008)

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 Coverage for Subcontractor’s Faulty Workmanship

Tred R. Eyerly | Insurance Law Hawaii

    Finding faulty workmanship that did not cause property damage beyond the subcontractor’s work, the court found there was no coverage under the CGL policy. Middlesex Ins. Co. v. Dixie Mech., Inc., 2022 U.S. Dist. LEXIS 175190 (N. D. Ga. Sept. 27, 2022). 

    The case involved a construction project on Elba Island, Georgia. IHI E&C International Corporation (IHI) filed suit against Robinson Mechanical Contractors (“Robinson”) for faulty construction work, including a pipe rack and process module installation. The pipe racks allegedly contained defective welds. Robinson filed a third-party complaint against Patriot Modular, Inc. (Patriot), Robinson’s subcontractor, for faulty work for IHI. Finally, Patriot filed a fourth-party complaint against Dixie Mechanical, Inc. (Dixie), alleging it subcontracted with Dixie to perform fabrication, welding, testing, and inspection of pipes under Patriot’s subcontract with Robinson. Patriot contended that to the extent it was found liable to Robinson for any defective work, delays or breaches of contract for Dixie’s work, Patriot was entitled to recover such amounts from Dixie.

    In this case, Dixie’s insurer, Middlesex Insurance Company, sought a declaration that it had no duty to defend or to indemnify Dixie. Middlesex contended that the claims of faulty workmanship in the underlying complaints constituted neither an “occurrence” nor “property damage.”

    The court agreed. “Occurrence” had to cause “property damage” and the insured had to incur a liability to pay “damages because of such property damage.” Coverage for property damage under a CGL policy required damage to property other than the work itself, and the insured’ liability for such damage would have to arise from negligence. The only reasonable interpretation of the allegations in the underlying complaints was that the asserted damages resulted from Dixie’s allegedly faulty workmanship under the subcontract and affected only the construction project.

    Therefore, judgment was entered in favor of Middlesex. 

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

Coverage for Collapse Ordered on Summary Judgment

Tred R. Eyerly | Insurance Law Hawaii

    A collapsed floor in a restaurant was found to be covered. J&J Fish on Center Street, Inc. v. Crum & Forster Spec. Ins. Co., 2022 U.S. Dist. LEXIS 163661 (D. Wis. Sept. 12, 2022).

    J&J Fish rented property from Vision. Vision was obligated to keep the premises insured under an all-risk policy. Vision was also responsible for maintaining and repairing the property “including the slab flooring exterior walls of the premises.” Vision never obtained insurance on the building, but J&J Fish secured a commercial property policy from Crum & Forster.

    On May 29, 2020, approximately 25% of the building’s slab floor, the section beneath the walk-in cooler, collapsed into the crawl space below. Dr. Daniel Wojnowski inspected the crawl space and observed overall dampness as well as a pool of water in the space. He concluded that the collapse occurred because the steel support beams and steel elements of the floor corroded after prolonged exposure to moisture. Based on this report, Crum & Forster denied coverage. J&J Fish sued and the parties moved for summary judgment.

    The policy covered collapse, which meant an abrupt falling down or caving in of a building or any part of a building. Further, if the collapse was caused by decay that was hidden from view, it was covered. 

    Here, 25% of the building’s floor fell three-and-a-half feet into the crawl space overnight. On its face, it was a sudden and unexpected fall or drop that rendered part of the building unfit for use as a restaurant.

    Crum & Forester raised several arguments against coverage. First, it claimed the events did not amount to a collapse because the policy did not consider a collapse to include a building or an part of a building to be in damage of falling down or caving in. But here, the slab floor was no longer “in danger of falling down” because that danger was long-passed with the floor already having fallen.

    Crum and Forster next argued that the decay causing the collapse was not hidden from view because it could be observed from within the crawl space. Dr. Wojnowski, equipped with a flashlight, entered the crawl space on all fours and observed the decay. But the problem with this argument was that “hidden” was a matter of degree. Under the plain meaning of the term, decay that was concealed within a cramped, unlit space was “hidden from view.”

    Crum & Forster also relied on exclusions expressed in the policy in sections other than Section D which addressed collapse. The court held that Crum & Forster could not rely on these exclusions to oust coverage under section D, and J&J Fish was entitled to summary judgment on the question of liability.

    Finally, the court held that Crum & Forster was entitled to subrogation against Vision pursuant to the lease between Vision and J&J Fish. Vision breached the lease by (1) failing to acquire property insurance and (2) failing to maintain the slab floor. 

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

Florida’s 25% Roofing Rule

Mike Rimoldi, William C. Bracken and Dave L. Compton | J.S. Held

Florida’s 25% Reroofing Rule, found in the 2020 (Seventh Edition) Florida Building Code– Existing Building Edition’s Chapter 7 Section 706 EXISTING ROOFING and as modified by Florida Legislature’s SB 4-D.


While the “25% rule” has been in the Florida Building Code (FBC) for many years, recent legislative changes, specifically within Senate Bill 4-D (2022), have clarified and/or changed the way this specific code section on existing roofing is to be applied.

Senate Bill 4-D added Section 1, Subsection (5) to Florida Statute 553.844 Windstorm loss mitigation; requirements for roofs and opening protection. This subsection states:

(5) Notwithstanding any provision in the Florida Building Code to the contrary, if an existing roofing system or roof section was built, repaired, or replaced in compliance with the requirements of the 2007 Florida Building Code, or any subsequent editions of the Florida Building Code, and 25 percent or more of such roofing system or roof section is being repaired, replaced, or recovered, only the repaired, replaced, or recovered portion is required to be constructed in accordance with the Florida Building Code in effect, as applicable. The Florida Building Commission shall adopt this exception by rule and incorporate it in the Florida Building Code. Notwithstanding s. 553.73(4), a local government may not adopt by ordinance an administrative or technical amendment to this exception.

The significance of this subsection is that it serves to establish an effective date after which all properly permitted existing roof coverings are deemed to be compliant with the current code. It is important to understand, however, that the effective date of the 2007 edition of the FBC went into effect on March 1, 2009. Hence this date is now to be used as the threshold date for application of the 25% rule found in the Florida Building Code.

Florida Building Code 25% Reroofing Rule

Florida Building Code – Existing Building §706.1.1:

Not more than 25 percent of the total roof area or roof section of any existing building or structure shall be repaired, replaced or recovered in any 12-month period unless the entire roofing system or roof section conforms to requirements of this code.

This means that if more than 25% of the roofing is damaged and the roof was not properly permitted (after March 1, 2009) then the entire roofing section must be reroofed. In the reverse, if the roof was properly permitted (after March 1, 2009) and the permit was subsequently “closed out” then this rule does not apply.

Florida Building Code – 25% Rule Decision Path

Was the current roof covering properly permitted after March 1, 2009?

  • If “YES” – Only repair/replace the area that is damaged regardless of extent of area damaged.
  • If “NO” – Is the extent of the area that is damaged less than 25% of the respective roof section?
    • If “YES” – Only repair/replace the area that is damaged.
    • If “NO” – Repair/replace the entire roofing section that contains the damage.
      (NOTE: upgrades may be required to the area being repaired/replaced)

The definition of a “roof section” is found in the Florida Building Code – Existing Building Edition’s Chapter 2 Section 202 DEFINITIONS.

Florida Building Code – Definitions – Roof Section

Florida Building Code – Existing Building Section 202:

ROOF SECTION. A separating or division of a roof area by existing expansion joints, parapet walls, flashing (excluding valley), difference of elevation (excluding hips and ridges), roof type or legal description; not including the roof area required for a proper tie-off with an existing system.

This means that both sides of a sloped roof are one section but changes in roofing material or changes in elevation are different roof sections.


Single Family Residence

This building has two roof sections shown as 1) the shingles/tile and 2) built-up membrane. While the ridges and valleys do not constitute separations between roof sections, different material types do constitute separations.

Figure 1 - A single family residence



This building has 15 roof sections shown. Roof sections 1 through 10 are separated by elevation and possibly material type. Sections 11 through 15 are separated by property lines.

Figure 2 - A townhouse



This building has 11 roof sections shown. Roof sections 1 through 10 are separated by elevation and possibly material type. Unlike the townhouse, the roof atop a condominium is not separated by property lines and is only one section.

Figure 3 - A condominium


Related Work

Section 502.3 in the 2017 (Sixth Edition) Florida Building Code Existing Building – Related work:

Work on nondamaged components that is necessary for the required work repair of damaged products shall be considered part of the repair and shall not be subject to the provisions of Chapter 6, 7, 8 9, or 11.

On December 31, 2020, the 2020 (7th Edition) Florida Building Code went into effect. As part of the 2020 Florida Building Code – Existing Building, some of the chapters were revised. In the older code edition there was some confusion as to what was a “repair” and what was an “alteration.” As part of the 2020 7th Edition, “repairs” are now separated from “alterations.” The repairs section now has its own chapter (Chapter 4).

When “repairs” was pulled out of the old Chapter 5 and moved to Chapter 4, the term “related work” (and its definition) were inadvertently left out of the new version of Chapter 4. This led to the misinterpretation that “related work” was no longer in the Building Code and as such was no longer excluded from the repair calculation. In other words, some were of the opinion that the non-damaged items adjacent to the items requiring repair and disturbed by the repair activities could no longer be deemed non-damaged items.

In response to this misinterpretation the Florida Building Commission provided clarification within its Declaratory Statement, DS 2021-007. In DS 2021-007, the Commission is stated:

In accordance with the definition of the term “Roof Section” in section 202, Florida Building Code, Existing Building, 7th Edition (2020), and the provisions of section 706.1.1, Florida Building Code, Existing Building, 7th Edition (2020), related work which involves the removal and installation of components for the purpose of connecting repaired areas to unrepaired areas (roof areas required for a proper tie-off) shall not be considered part of the roof repair in question, and therefore such related work shall not be counted toward the 25 percent threshold stated in section 706.1.1, Florida Building Code, Existing Building, 7th Edition (2020).

As such, related work necessary to address the primary work area shall not be included in the calculations to determine the total percentage of the roof area. In other words, the non-damaged items adjacent to the items requiring repair remain non-damaged items whether they are disturbed or not.


The 25% rule related to roofing in the State of Florida has undergone some administrative changes in order to clarify the way it is applied. Namely, Senate Bill 4-D established the threshold date to follow that of the 2007 Florida Building Code (March 1, 2009) and Declaratory DS 2021-007 issued by the Florida Building Commission has effectively brought “related work” back into the determination process.

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