The collapse of part of a Surfside, Florida residential building, where at least 18 have been confirmed dead and 145 still unreported, is likely to lead to long-running disputes that could trigger a wider pool of property and claims. say experts.
To date, at least four negligence lawsuits have been filed for the surviving residents and family of the missing against Champlain Towers South Condo Association Inc., alleging that it failed to secure and protect the plaintiff's life and property, and more are expected.
Property coverage for the building was led by Great American Insurance Co. according to an all other risk property policy, say market sources. The apartment association also had a $ 5 million commercial general liability policy provided by James River Insurance Co., according to various reports. Both insurers have not yet responded to requests for comment.
Approximately 55 apartment units in Champlain Towers South's 1
"When you have a tragedy of this size, there will be lawsuits flying left, right and center, there will be insurance implications everywhere you think about different types of coverage," says Allen Wolff, a New York-based shareholder on Anderson Kill PC
In addition to real estate and commercial liability, the incident could potentially trigger a series of claims under umbrella and overriding liability, board members and officers, errors and omissions, and possibly tenants.
Engineers, architects, contractors who worked or advised on the property, building inspectors and adjoining properties who had done work that may have contributed to the collapse could also be drawn into the disputes, lawyer Neys says.
Most board associations' boards have D&O insurance for management decisions, but usually the insurance does not cover bodily injuries or damages, Wolff said.
"It does not mean that it would not" There can be no other losses that people would say are D & O-related, such as a discovery that there was financial mismanagement, failure to manage the apartment association's activities in such a way that work that should have been done was not because they did not have money, ”he said.
A report on structural engineering from 2018 to Champlain Towers South's tenant-owner association reported many problems that required repairs and maintenance, including cracks in the concrete and water damage. The apartment association in April approved an estimate of $ 15 million to complete repairs required by the county's 40-year certification process, according to reports.
The property policy can also provide business interruption coverage that would insure the lost profits that the property would generate if it were closed due to a covered cause of loss, Wolff said. "It is tried quite hard with regard to COVID in these cases in such cases."
The structural collapse of a building is usually caused by several factors, but whether coverage is provided under property policy will depend on the causes of the collapse being covered, policy provisions and other factors, experts say.
Derek Goldsmith, a Fort Lauderdale, Florida-based partner with defense attorney Kelley Kronenberg PA who represents insurers in coverage disputes, said, "The big question is what caused this loss and was the cause of the loss the insured knew about before the collapse. "which gave them time to react, and they failed to do so."
If the investigation reveals what caused the collapse was unknown to the insured, there may be coverage under the policy, but there may be obstacles to coverage "if the collapse was the result of any excluded event such as wear and tear, deterioration, improper repairs, neglect and the insured knew about this, ”he said.
Under Florida law, any wrongdoing in an insurance application can be used as a basis for invalidating the policy, says Corey Harris, an attorney at Merlin Law Group in Tampa, Florida. . "It does not have to be intentional, it just has to be wrong … If (the insurer) can show that it may not matter what the policy provides coverage for if there is an issue
Usually there is collapse language under the further coverage in a property policy.
Such additional coverage will have its own insurance clause, its own list of exceptions and may have its own list of exceptions to these exceptions, Wolff said. "In many cases, policies that allow for a sudden collapse like additional coverage require certain things to trigger coverage," he said.
Cause will be at play, says Leslie Thorne, a partner at Haynes and Boone LLP, in New York. Once this is determined, it will be a matter of property insurers paying out the limits set out in the policy and then subrogating and pursuing claims against alleged liable parties, including inspectors, engineers, contractors and their insurance companies, she said.
Politics sometimes has exclusions related to collapse and earthquakes and "both of these things can become problems here depending on the ultimate cause," Thorne said.
If there are a number of different factors that led to the collapse, the question becomes "is there anti-competitive causal language in the policy in the exclusion section and if there is, how does it affect it?" Mr. Harris said.
The clause against concomitant causes is intended to eliminate coverage for loss caused in part by an excluded danger.
Decay and defective materials or construction methods are two policy provisions that may increase barriers to coverage. , says Alan Packer, managing partner at Walnut Creek, California, Newmeyer & Dillion LLP office.
If the collapse is caused by decay hidden from view, coverage would be provided, unless the occurrence of such decay is known to an insured before collapse, Packer said. "I could see an insurance company say, 'Look, we do not cover collapse if it is caused by decay that the association was aware of before the collapse occurred,'" he said.
If a building collapses during construction, remodeling or renovation due to defective materials or execution, there is coverage, but "if it turns out that your building was built 40 years ago and that's why the collapse occurred, you can end up with an exclusion there as well," Packer said.  Several things must happen for a building like this is going to collapse, says Anne Cope, chief engineer at the Insurance Institute for Business and Home Safety in Rock Hill, South Carolina.
"We usually think of buildings as permanent because materials like concrete and steel are so hard, and they are not; they must be maintained. If they are damaged, they must be repaired, just as people do, she said.
"Unfortunately, it looks like the building that came down showed signs of distress and showed that it was damaged," Cope said.
Risk management focus
Many risk management lessons will be drawn from this event, experts say.
Policyholders should always review their coverage, says Thorne. Completely unexpected events can happen. Businesses and homeowners do not just have to be prepared for catastrophic losses if they are in a hurricane zone, she says.
Risk managers and building owners should regularly inspect their properties and have areas that may be vulnerable to water corrosion or damage evaluated, Cope said.
While this building was built in a timeline for Hurricane Andrew, South Florida was known for having better building codes than the rest of the country, even before Andrew, Ms. Cope sa.
"My question is, what about buildings in the state 's that do not have building codes in the whole country? How about the coasts of Texas and Mississippi? What questions should we ask there? " she said.