U.S. Sues Factory Mutual Over 9/11 Cleanup
By Gary Mogel
NU Online News Service, July 2, 11:35 a.m. EDT?The Manhattan U.S. Attorney's Office is suing Factory Mutual Insurance Company, accusing the Rhode Island carrier of refusing to pay the clean-up and damage costs for a post office affected by the Sept. 11 attacks.
The building located near the World Trade Center site was hit by burning debris, causing fire and smoke damage, shattered windows, and water damage from the building's sprinkler system, the suit filed in U.S. District Court in Manhattan alleges. The water damage caused mold to grow in the building's walls, ceilings and air-conditioning ducts. In addition, there was a business interruption loss, according to the complaint.
The suit seeks payment for property damage, debris removal costs, business interruption and clean-up expenses under the post office's "all-risk" property insurance policy.
A Factory Mutual spokesperson would not comment on pending litigation.
Diana Reitz, an insurance coverage expert with National Underwriter Company's FC&S Bulletins, said that coverage under an "all-risk" policy is triggered by direct physical damage to the property, and losses are covered unless specifically excluded.
Debris removal and clean-up, as well as water damage from sprinklers, is normally covered as part of the property loss under an all-risk policy, Ms. Reitz noted.
However, she added that clean-up expenses for mold damage would usually be covered only if they arose as a result of a covered peril, such as fire causing the sprinklers to go off. "Without a triggering force, such as if the mold was already there before the building was damaged, there would probably be no coverage."
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