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Home / Insurance / Exemptions from Laws and Regulations and Coverage and Constructive Total Loss – A Perspective in Florida | Legal insurance blog for property insurance

Exemptions from Laws and Regulations and Coverage and Constructive Total Loss – A Perspective in Florida | Legal insurance blog for property insurance



Coverage of laws and regulations is important for policyholders who suffer a significant loss and are facing conversion to newer building standards and local regulations, which generally increases building costs. Florida has made significant changes to its building codes since Hurricane Andrew occurred in 1992. Buildings are safer and stronger today than they were a few decades ago. But the cost of making them safer and stronger is not cheap.

In 2006, the Florida Office of Insurance Regulation compiled a study of law and ordinance coverage and noted the following:

Building codes became widespread in the United States over the past century, although the earliest known building ordinance appeared in the Hammurabi Code for more than 4000 years ago. According to the building regulations, if an architect built a house negligently or incorrectly and the house fell down and killed the owner's son, the architect's son would be killed.

The first state building code was commissioned by the Florida Legislature in the early 1

970s and required all cities and counties to adopt and enforce one of the four state-recognized model codes. In the late 1990s, the state of Florida established the Florida Building Commission, which developed a single state building code that would be administered and enforced by local jurisdictions and certain government agencies. Under certain circumstances, these state entities may change the building code and make the requirements more stringent. One reason for the development of the new Florida Building Code, which went into effect on March 1, 2002, was to strengthen and make more uniform building requirements for windstorm-related exposures. In general, the new building code has stronger windstorm-related requirements for buildings closer to the coast.

Building codes usually set minimum requirements for the quality and durability of building materials and techniques to be both "practical and sufficient to protect the life, safety and well-being of the public" (See Alachua County Code). The codes cover most aspects of building construction, such as fire safety and construction safety, electrical, plumbing and mechanical systems, as building codes change from time to time and tend to reflect higher standards and improved technology, an important feature of building codes is that they only apply to new construction and are not applied retroactively to existing buildings.

However, they apply to existing buildings that are significantly damaged or rebuilt, for example, section 3401.7.2.6 of the Florida Building Code states:

When repairs and alterations amounting to more than 50% of the value of the existing building are made during a twelve-month period, the building or structure shall be made to fulfill all the requirements for a new building or structure or completely demolished.

This provision, which usually appears in this or similar form in building codes elsewhere, has important implications for property insurance (see Florida Association of Insurance Agents)

is intended to rebuild or repair a damaged structure and return it to the state where it was before the loss caused by a covered hazard. . This coverage is not intended to cover all costs of updating the structure so that it complies with applicable building and zoning regulations, codes and regulations. This is especially a problem when a structure is substantially, but not completely, destroyed and when the undamaged part of the structure requires extensive renovation to comply with applicable building and zoning regulations, codes and regulations.

A claim is for insurance adjusters. to hire forensic scientists, usually from HAAG, JS Held, Rimkus or Thorton Tomasetti to challenge whether a structure needs to be built to the new code. While the insurance department supports newer and stronger building codes, the claims departments are accused of reducing payments if policyholders buy the law and regulatory coverage to pay for it. partial losses and does not apply to determine whether a loss constitutes a constructive total loss in circumstances where a regulation prevents repair. 1

In Dutch Insurance Company v. Fowler ]the insurer claimed that the total destruction of the building was caused by the operation of city building codes rather than the fire, which it claimed was precluded by exclusion of exclusion caused by regulations governing construction. The court upheld the lower court's decision on "total loss by fire" in which the building was seriously damaged by fire and the city refused to allow repairs and ordered demolition. 2

I Trust Insurance Company Against Harris 3 The insurer claimed that there was a real question of material facts as to whether Harris did or should have mitigated his damages by repairing the building . However, the court found that the insurance only requires the insured to protect the property from further damage, make temporary repairs and keep accurate records of repairs. In Harris ”was the real battle over the possibility of granting trust to repair or replace the lost or damaged property. At the same time as we were arguing about that alternative, the building was demolished. “The case suggests that carriers should do the rebuilding themselves or something other than claiming that the construction representative's determination was wrong.

Citizens & # 39; Insurance Company v. Barnes 4 recognized the rule down in other jurisdictions that parties are assumed to have entered into agreements with knowledge of statutory limitations and requirements that become part of the agreement. The court held that where a building inspector found a building was damaged to more than fifty percent of its value, an ordinance prohibiting the repair of such damage made the building a total loss. The Barnes court also took up the decisive nature, in a subsequent measure for insurance revenues, of the government inspector's decision that the building was damaged to a extent of fifty percent of its value and thus required demolition.

As for the city authority to impose such an order, Barnes the court said “that such orders are valid and binding police regulations are considered so generally true that it is unnecessary to cite authorities in support of this discovery. " The Barnes court argued that" the decisions of these officers should be disturbed only on very clear grounds. " Such orders are recognized as decisive in a subsequent action for an insurance policy. 5

Thought for the day

A world that sees art and engineering as fragmented does not see the world as a whole.
—Professor Sir Edmund Happold
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1 City of New York Fire Ins. Co. v. Chapman 76 F.2d 76 (7th Cir. 1935); Rutherford v. Royal Ins. Co. 12 F.2d 880 (4th cir. 1926); Netherlands Ins. Co. v. Fowler 181 So. 2d 692 (Fla. 2d DCA 1966); Reliance Ins. Co. v. Harris 503 So. 2d 1321 (Fla. 1st DCA 1987), rev. denied, 513 So. 2d 1063 (Fla. 1987); Regency Baptist Temple v. Ins. Co. in North America 352 So. 2d 1242 (Fla. 1st DCA 1977).
2 Netherlands Ins. Co. v. Fowler 181 So. 2d 692 (Fla. 2d DCA 1966). See also R egency Baptist Temple v. Ins. Co. in North America 352 So. 2d 1242, 1244 (Fla. 3d DCA 1977).
3 Reliance Ins. Co. v. Harris 503 So. 2d 1321 (Fla. 1st DCA 1987).
4 Citizens ’Ins. Co. v. Barnes 98 Fla. 933, 124 So. 722 (Fla. 1929).
5 See Algernon Blair Group v. USF & G 821 F.2d 597, 602 (11th Cir. 1987) (Although the insurer could have questioned the city after failing to do so. the insurer can not later dispute the results and avoid coverage in a subsequent action brought by the policyholder who tries to force the coverage.).


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