{"id":901175,"date":"2023-05-17T11:05:14","date_gmt":"2023-05-17T17:05:14","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=901175"},"modified":"2023-05-17T11:05:14","modified_gmt":"2023-05-17T17:05:14","slug":"builders-risk-insurance-coverage-occurrence","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/builders-risk-insurance-coverage-occurrence\/","title":{"rendered":"An Occurrence Under Builder’s Risk Insurance Policy is Based on the Language in the Policy"},"content":{"rendered":"\n

David Adelstein | Florida Construction Legal Updates<\/a><\/p>\n\n\n\n

Builder\u2019s risk insurance coverage<\/a> is a\u00a0vital<\/u>\u00a0property insurance coverage during the course of construction<\/strong>.\u00a0\u00a0Builder\u2019s risk insurance<\/a>\u00a0is not a one-size-fits-all product so please make sure you are working with your insurance broker to procure this product that factors in and covers risk associated with the project.<\/p>\n\n\n\n

Builder\u2019s risk insurance is typically an occurrence-based<\/strong> policy. No different than other occurrence-based policies (such as commercial general liability), a dispute may arise as to the occurrence. This could be due to the triggering of the actual policy during the coverage period or it could be due deductible obligations, as in the case discussed below. When dealing with a builder\u2019s risk insurance policy\u2013again, no different than any policy\u2013the language in the policy matters.  Definitions used in the policy to define specific terms matter and, in numerous cases, the ordinary dictionary meanings of terms matter. But it all starts with the policy language.<\/p>\n\n\n\n

In KT State & Lemon, LLP v.  Westchester Fire Insurance Co<\/em>., 2023 WL 2456499 (M.D.Fla. 2023), a builder\u2019s risk policy provided coverage from April 2018 through the end of November 2019.  There was a $50,000 per occurrence deductible for loss caused by or from water damage.  An extension to the builder\u2019s risk policy was negotiated through the end of January 2020 that increased this water damage deductible to $250,000 per occurrence.  During construction and the testing of the fire suppression (sprinkler) system, leaks started to occur resulting in water damage.  Two leaks occurred in September 2019, one leak in October 2019, one leak in November 2019, and two leaks in December 2019 (during the extension and higher water damage deductible period).<\/p>\n\n\n\n

The plaintiff-insured argued that all of the leaks in the fire sprinkler system should constitute one single occurrence.  Naturally, it did so because one occurrence would be a $50,000 deductible since the initial leak occurred prior to the extension period.  The insurer took a contrary position and argued that each leak was a separate occurrence meaning there were four leaks with a $50,000 per occurrence deductible and two leaks in December 2019 each with a $250,000 deductible.  This is a big deal from a dollar\u2019s perspective as it means each leak would have to have damages in excess of the per occurrence deductible and the insured would potentially be responsible for the first $700,000 in water damage based on the six leaks.<\/p>\n\n\n\n

\u201cIn Florida, the [insurance] contract should be \u2018construed according to the plain language of the policy,\u2019 and any ambiguities must be \u2018construed against the insurer and in favor of coverage.<\/strong>\u2019 KT State, supra,<\/em> at *2 (citations omitted).<\/p>\n\n\n\n

The Court looked at the policy language, specifically how the builder\u2019s risk policy defined the term \u201coccurrence\u201d as it would be this definition in the policy that shed light on whether there would be one occurrence or multiple occurrences:<\/p>\n\n\n\n

All LOSS attributable directly or indirectly to [1] one originating cause, event, incident or repeated exposure to the same originating cause, event or incident, or [2] to one series of similar originating causes, events, incidents or repeated exposures to the same originating cause, event or incident first occurring in the Policy period. All such LOSS will be treated as one OCCURRENCE, unless a specified period of time is included in this Policy. The most the Company will pay for LOSS in any one OCCURRENCE is the applicable Limit of Insurance shown on the Declarations.<\/em><\/p>\n\n\n\n

As to the underlined above, the policy did not define the terms \u201cseries\u201d or \u201csimilar.\u201d Yet, these terms are not technical terms so the Court looked at the ordinary dictionary definitions. \u201cThe dictionary meaning of \u2018series\u201d is \u2018[a] number of things of one kind (freq. abstract, as events, actions, conditions, periods of time) following one another in time or in logical order.\u2019 The dictionary meaning of \u2018similar\u2019 is \u2018alike in substance\u2019 or \u2018having characteristics in common.\u2019\u201d KT State, supra<\/em>, at *3 (citations omitted).  Based on the definition of \u201coccurrence\u201d in the policy, and the ordinary dictionary definitions of \u201cseries\u201d and \u201csimilar,\u201d the Court found the six fire sprinkler leaks constituted only one occurrence:<\/p>\n\n\n\n

Reading the policy language from the standpoint of an ordinary person, in light of the common meaning of the terms used, and in a common-sense and natural manner produces only one reasonable conclusion. Plaintiffs\u2019 claimed loss was attributable, directly, or indirectly, to a \u201cseries of similar originating causes, events, [or] incidents,\u201d and therefore resulted from one occurrence<\/u>. The loss resulted from leaks in the same sprinkler system, due in whole or part to improper installation by the same [subcontractor] crew under the same contract, in the same general location in the same building, and occurred one after the other in a relatively short span of time from late September to December 2019<\/u>.<\/strong><\/p>\n\n\n\n

KT State, supra<\/em>, at *4.<\/p>\n\n\n\n

Yet, despite there being one occurrence, the Court applied a caveat to the benefit of the insurer since there were two leak incidents during the extension of the policy with an increased $250,000 per occurrence deductible:<\/p>\n\n\n\n

Accordingly, under the Policies\u2019 definition of \u201coccurrence,\u201d the leaks at issue together constituted one occurrence. For damage from leaks that occurred prior November 30, 2019, therefore, a single deductible of $50,000 applies. The result is <\/u>different, however, for leaks after that date, because the parties expressly modified the Policies at that point<\/u>. The original policy term ended on November 30, 2019. Plaintiffs were only entitled to purchase an extension of coverage beyond that date on the same terms as before if no \u201crisk aggravating situation\u201d was present at the time of the extension. But such a situation was present, because Plaintiffs had reported multiple leaks, and that was obviously the reason the parties changed the water damage deductible to $250,000 when they extended coverage to January 30, 2020. It is clear that the increased deductible was intended to apply to similar water damage events occurring during the extended policy period. Therefore, the increased deductible applies to water damage from leaks occurring after November 30, 2019, notwithstanding the definition of \u201cone occurrence.\u201d<\/u><\/strong><\/p>\n\n\n\n

KT State, supra<\/em>, at *5.<\/p>\n\n\n\n

\n\n\n\n

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 experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

David Adelstein | Florida Construction Legal Updates Builder\u2019s risk insurance coverage is a\u00a0vital\u00a0property insurance coverage during the course of construction.\u00a0\u00a0Builder\u2019s risk insurance\u00a0is not a one-size-fits-all product so please make sure you are working with your insurance broker to procure this product that factors in and covers risk associated with the project. Builder\u2019s risk insurance is… Continue reading An Occurrence Under Builder’s Risk Insurance Policy is Based on the Language in the Policy<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9914],"tags":[9895,11892,23],"class_list":["post-901175","post","type-post","status-publish","format-standard","hentry","category-insurance-coverage","tag-advise-consult","tag-builders-risk-insurance-coverage-2","tag-insurance-coverage","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nAn Occurrence Under Builder's Risk Insurance Policy is Based on the Language in the Policy - Advise & Consult, Inc.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/builders-risk-insurance-coverage-occurrence\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"An Occurrence Under Builder's Risk Insurance Policy is Based on the Language in the Policy - Advise & Consult, Inc.\" \/>\n<meta property=\"og:description\" content=\"David Adelstein | Florida Construction Legal Updates Builder\u2019s risk insurance coverage is a\u00a0vital\u00a0property insurance coverage during the course of construction.\u00a0\u00a0Builder\u2019s risk insurance\u00a0is not a one-size-fits-all product so please make sure you are working with your insurance broker to procure this product that factors in and covers risk associated with the project. 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