Construction Insurance News

Trump Wants to Curtail Flood Insurance in Flood-Prone Areas

October 19, 2017
Christopher Flavelle - Bloomberg

President Donald Trump proposed ending federal flood insurance for new homes in areas most at risk of flooding, a change that could curtail new construction in vast parts of Florida, Louisiana and along the Eastern Seaboard.

Trump’s plan would radically overhaul the program created in 1968 to help protect homeowners who live along coasts or near rivers. The idea, sent by the White House to Congress, created an unlikely set of responses: Home builders warned it could stifle the economy while climate activists, who have battled Trump, called the idea smart.

Obligations Under Indemnity Provision and Providing Insurance Coverage Separate

October 11, 2017
Tred R. Eyerly - Insurance Law Hawaii

The Fifth Circuit construed a contract requiring indemnity and an obligation to provide insurance coverage as creating separate duties. ExxonMobil Corp. v. Elec. Reliability Services, 2017 U.S. App. LEXIS 16031 (5th Cir. Aug. 22, 2017).

Exxon contracted with Electrical Reliability Services (ERS) to perform electrical work and services at Exxon's chemical facility in Beaumont, Texas. The contract included indemnity and insurance provisions. The indemnity provision required that each party indemnify the other from third party claims resulting from the first party's negligence. The insurance provisions required ERS to purchase CGL and other types of insurance, and to name Exxon as an additional insured.

Mr. Eyerly may be contacted at

Claim Made During Second Consecutive Policy Period Properly Denied

September 28, 2017
Tred R. Eyerly - Insurance Law Hawaii

The court found that the insurer properly denied a claim made under the claims-made policy during the second policy period when the incident occurred during the first policy period. Alaska Interstate Constr. v. Crum & Forster Specialty Ins. Co., 2017 U.S. App. LEXIS 15997 (9th Cir. Aug. 22, 2017).

Mr. Eyerly may be contacted at

SBA Institutes Changes in Surety-Bond Guarantee Program

September 20, 2017
Tom Ichniowski - Engineering News-Record

The Small Business Administration has made changes in its surety bond guaranty program that industry officials say will benefit small construction firms.

Mr. Ichniowski may be contacted at

Hurricanes Highlight Failure to Enforce Flood Insurance Rules

September 14, 2017
Christopher Flavelle - Bloomberg

As the floodwaters of Hurricanes Harvey and Irma recede, they may reveal more than moldy drywall and fetid trash. They could lay bare the federal government’s failure to police a basic tenet of its own disaster policy: that properties with government-backed mortgages in risky areas carry flood insurance.

The government has known for decades that homeowners in flood zones often don’t have the insurance they should. Just two years ago, the Federal Emergency Management Agency estimated that as few as half of the 1.5 million residential structures required to carry flood insurance actually do. It can’t be sure, though: FEMA isn’t responsible for tracking that kind of data—nor is any other agency.

After Hurricane Harvey, What Will Your Builders' Risk Policy Pay For?

September 7, 2017
Scott Van Voorhis - Engineering News-Record

In the wake of the massive destruction wrought by Harvey, details tucked away in builders’ risk policies may spell the difference between financial relief and hardship for some contractors.

ENR may be contacted at

Harvey May Be Among the World’s Costliest Recent Catastrophes

August 30, 2017
Laurie Meisler & Yvette Romero – Bloomberg

With Hurricane Harvey continuing to wreak havoc along the Gulf Coast, its full economic impact is still unclear. Risk-modeling company RMS estimates $70 billion to $90 billion in losses from wind, storm surge and flood damage, most of it in the Houston metropolitan area. That would make the storm among the world’s most costly catastrophes since at least 1970. And this is happening in what was considered a few short weeks ago as a fairly tame weather year. According to Swiss Re, total economic losses from disasters were $44 billion in the first half of 2017, down 62 percent from the first half in 2016. The biggest losses were from thunderstorms, and more than half of the $44 billion was insured. Although forecasters are reluctant to estimate how much of Harvey’s damage insurers might pay, Chuck Watson, a disaster modeler with Enki Research, puts the figure at about 27 percent, far less than the 47 percent paid out for Hurricane Katrina.

Reprinted courtesy of Laurie Meisler, Bloomberg and Yvette Romero, Bloomberg

Viewpoint: Making the Case for Firms to Buy Terrorism Insurance

August 24, 2017
Kent W. Collier - Engineering News-Record

It’s only a matter of time before a terrorist again targets American infrastructure for a deadly act of violence. We have seen attacks across Europe—at airports, on pedestrian avenues and atop bridges. When such a tragedy eventually reoccurs in the U.S., the victims and their survivors are likely to sue the owners, developers, contractors or design professionals involved in creating the structures where the attack occurs. Will the companies and professionals have adequate insurance coverage?

ENR may be contacted at

Will AIA's Revised Contract Options Prompt More Insurance Coverage?

August 17, 2017
Scott Van Voorhis & Richard Korman - Engineering News-Record

Builders risk insurance policies pack together different property insurance coverages for construction projects. They also often contain coverage for “civil authority” or “expediting cost” and “ingress/egress” insurance.

Reprinted courtesy of Scott Van Voorhis, ENR and Richard Korman, ENR

ENR may be contacted at

How to Reform Flood Insurance

August 10, 2017
H. Joseph Coughlin Jr. - Engineering News-Record

When FEMA’s National Flood Insurance Program (NFIP) expires next month, the pressure will be on Congress to reauthorize the program, ideally by adopting long-delayed reforms. Any discussion of NFIP reform should begin with an understanding of how it began, where it has gone and what is needed for its future.

ENR may be contacted at

Risk Allocation: What AIA's New Standard Form Agreements Say

August 2, 2017
Richard Korman - Engineering News-Record

As the managing director of the American Institute of Architect's Contract Documents program, Ken Cobleigh was responsible for the once-per-decade review-and-rewriting process that culminated in the release in April 2017 of the updated A201—the General Conditions for the Contract for Construction—and other related contract documents. The changes reflect in many ways the fast-changing methods of design and construction, including contract exhibits related to building-information modeling, sustainability and insurance. Cobleigh, who studied law at the University of Maryland, was a construction litigation attorney before joining AIA 11 years ago. He spoke with Deputy Editor Richard Korman about the new insurance exhibit and other matters related to the new AIA standard form agreements and risk allocation.

Mr. Korman may be contacted at

Insurer Must Defend Allegations of Misrepresentation

July 26, 2017
Tred R. Eyerly - Insurance Law Hawaii

The Montana Supreme Court held that the insurer had a duty to defend allegations of misrepresentation against the insured seller of a home. Huckins v. United Serv. Auto. Assoc., 2017 Mont. LEXIS 334 (Mont. June 13, 2017).

Mr. Eyerly may be contacted at

Additional Insured Not Covered When Injury Not Proximately Caused by Insured

July 19, 2017
Tred R. Eyerly - Insurance Law Hawaii

The New York Court of Appeals construed an additional insured endorsement as applying only to injury proximately caused by the named insured. Burlington Ins. Co. v. NYC Transit Auth., 2017 N.Y. LEXIS 1404 (N.Y. Ct. App. June 6, 2017).

Breaking Solutions, Inc. (BSI) contracted with the New York City Transit Authority (NYCTA) to provide equipment and personnel for BSI's tunnel excavation on a New York City subway construction project. BSI purchased commercial general liability insurance from Burlington with an endorsement that listed NYCTA and New York City as additional insureds.

Mr. Eyerly may be contacted at

New Earth Movement Exclusion Construed to Bar Coverage

July 13, 2017
Tred R. Eyerly - Insurance Law Hawaii

Facing an issue of first impression, the West Virginia Supreme Court ruled that property damage caused by either a man-made or a natural cause was excluded under the Insurance Service Office's 2013 earth movement endorsement. Erie Ins. Prop. & Cas. Co. v. Chaber, 2017 W. Va. LEXIS 430 (W. Va. June 1, 2017).

Five commercial rental units were located on the insureds' property. One unit was a motorcycle shop. Soil and rock slid down a hill and damaged the motorcycle shop. A claim was submitted to Erie.

Mr. Eyerly may be contacted at

Dispute Over Coverage for Snow Removal and Related Damage Survives Insurer's Summary Judgment Motion

June 29, 2017
Tred R. Eyerly - Insurance Law Hawaii

The federal district court largely denied the insurer's motion for summary judgment seeking a judgment of no coverage for snow removal and related property damage. Thurston Foods v. Wausau Bus. Ins. Co., 2017 U.S. Dist. LEXIS 74935 (D. Conn. May 17, 2017).

The insured was a food distributor with a warehouse that was constructed in 1990. It contained an industrial freezer. The freezer used a ventilation system under the freezer floor. In 2003, the insured constructed an addition to the freezer and expanded the ventilation system to include the area under the addition.

Mr. Eyerly may be contacted at

How to Control Potential Construction Surety Claims

June 21, 2017
Richard Korman - Engineering News-Record

The relationship between construction management and general contracting powerhouse Crossland Construction Co. and insurance broker and surety bond producer IMA Inc., both based in Kansas, goes back 30 years and involves many people. One of them is Columbus-based Maurice Harley, a senior financial analyst with Crossland, who has spent most of his career involved with risk, surety and construction. Monica Donatelli, who began her career in banking, is now a surety manager with IMA Inc. She is based in Overland Park, Ka.

Mr. Korman may be contacted at

Occurrence is Covered Where Pollution Event Is Not Efficient Proximate Cause Of Loss

June 15, 2017
Tred R. Eyerly - Insurance Law Hawaii

Although the policy excluded pollution, the negligence that preceded the escape of the pollution was the efficient proximate cause, negating the impact of the pollution exclusion. Xia v. ProBuilders Specialty Ins. Co. RRG, 2017 Wash. LEXIS 443 (Wash. April 27, 2017).

Zhaoyun Xia purchased a new home in May 2006. The home was constructed by Issaquah Highlands 48 LLC. Issaquah Highlands had a CGL policy issued by ProBuilders.

Mr. Eyerly may be contacted at

Insurance Company Not Responsible For Paying Pre-Tender Legal Fees

June 5, 2017
Robert H. de Flesco III, Esq. - Florida Construction Law News

Insurance carriers can breathe a little easier. The Eleventh Circuit recently ruled, in, Inc. v. Travelers Property & Casualty Co. of America, that an insurer did not have to pay attorneys’ fees incurred by its insured before the insured notified it of the litigation.[1]

Mr. de Flesco may be contacted at

Home Capital Halts Dividend, Adds Former Pension Executives

May 10, 2017
Maciej Onoszko & Kim Chipman - Bloomberg

Home Capital Group Inc. suspended its dividend and added two former pension fund executives to its board as the mortgage lender tries to win back shareholder trust following accusations that it misled investors over fraudulent loan applications.

The Toronto-based lender, facing a run on deposits, said it will suspend its quarterly dividend to “manage liquidity,” according to a statement Monday. The company’s high-interest savings accounts, used to fund its mortgages, have slipped to C$192 million ($140 million), from almost C$2 billion five weeks ago. The guaranteed investment certificates, or GICS, fell to C$12.6 billion, from C$12.9 billion last month.

Do I Really Need My Own Lawyer if the Insurer is Giving Me One? (Law Note; Tip)

May 3, 2017
Melissa Dewey Brumback - Construction Law in North Carolina

Several readers have reached out to me about my post on getting a Reservation of Rights letter with comments and questions. The most common refrain has been something along the lines of: “Do I really have to hire my own lawyer after paying insurance premiums just because I got one of those pesky ROR letters?”

The short answer is that you do not *have* to hire your own lawyer. But, it can be very useful. And, it can be done economically so you don’t have to break the piggy bank. You see, if you hire your own lawyer, they can be “back up” and simply monitor the lawsuit, while the insurance-retained lawyer does the yeoman’s work. That way, if the insurance carrier begins to make noise about filing a declaratory judgment to deny the claim, you have your own lawyer already in place, knowledgeable about what’s happened in the case from the get-go. But if the insurance company never “pulls the trigger” on denying the claim, then your private lawyer’s involvement (and bill) will be minimal.

Ms. Brumback may be contacted at

Insurance Customers Need to Get Used to Talking to Machines

April 20, 2017
Oliver Suess - Bloomberg

Frustrated with automated answering machines before you finally get to speak with a customer service representative? When it comes to insurance, you’ll just as likely end up dealing with a robot as a human within three years, according to a survey by Accenture Plc.

Insurers Fine-Tune Professional Liability Premiums

April 13, 2017
Richard Korman - Engineering News-Record

Recent claims are playing a larger role in the way insurance underwriters analyze a particular risk in coverage for engineers and architects, says broker Ames & Gough.

Mr. Korman may be contacted at

Attorney Allowed to Withdraw When Insolvent Insurer No Longer Pays for Defense

April 5, 2017
Tred R. Eyerly – Insurance Law Hawaii

The magistrate recommended that the attorney's motion to withdraw from further representation of the insured be granted when the insurer was liquidated and no longer paying for defense costs. U.S. v. Estate of Lillian Wiesner, 2017 U.S. Dist. LEXIS 38257 (E.D. N. Y March 15, 2017).

Mr. Eyerly may be contacted at

No Bad Faith Failure to Indemnify for Punitive Damages

March 29, 2017
Tred R. Eyerly – Insurance Law Hawaii

The court determined the insurer did not act in bad faith when it failed to indemnify the insured for an award of punitive damages. Bensalem Racing Ass/n v. Ace Prop. & Cas. Ins. Co., 2017 Phila. Ct. Com. Pl. LEXIS 11 (Pa. D. Jan. 20, 2017).

Mr. Eyerly may be contacted at


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