Neglectful neighbors and property damage liability

We have an engineer's report indicating the left elevation is no longer waterproof. Within the text of the report, the engineer states that the building sustained a loss. The report goes on to suggest possible remedies. However, these remedies do not indemnify the insured.  

— New York Subscriber

Answer: Is the insured's policy written on the ISO forms? If not, then we may need to see the actual form providing the insured's coverage.

In the ISO CP 00 10 Building and Personal Property Coverage Form, the insured's building coverage is dependent upon the building described in the Declarations being damaged due to a covered cause of loss. The covered cause of loss would be determined based on which cause of loss form was attached to the policy (Basic – CP 10 10, Broad – CP 10 20, or Special – CP 10 30).

It does not sound like the insured has suffered damage due to a covered property loss, but rather due to the other building owner's demolition. If such were the case, this would be the subject of a property damage liability claim that the insured might have against the other building owner's policy.

Demolition details

Question: The insured suffered a total loss to their residence. The insurance company has agreed to cover the cost of demolition, however, they refuse to pay for the cost to fill and grade the hole left by the demo and debris removal. The policyholder is insured under a HO 0005 (10/00).

The insurance company has taken the position that the fill is a claim for land, and land is excluded under the policy. It is our position that the "land" exclusion applies to claims for damages to land. We are not claiming damage to land; rather we need to back-fill the hole as part of the debris removal.

I feel it should be covered for several reasons:

1. The land exclusion does not apply to fill;
2. The insured is required to fill in the hole under the policy to protect the property from further damage (i.e. someone falling in the hole and getting injured resulting in a liability claim); and
3. Because filling in the hole is required by local law and ordinance. The insured does have coverage for law and ordinance.

Please provide your assessment.

— Michigan Subscriber

Answer: You are right: The exclusion for land is for damage to land, not ensuing damage that is part of the repair. The building must be torn down before it can be reconstructed, and the hole caused by the demolition must be filled. This is all part of restoring the insured to his original position, the principal of indemnity. If a family of woodchucks had burrowed under the ground to where it collapsed leaving a gaping hole that would be excluded; that's damage to the land.

Sour smells prompt emergency move

Question: Would loss of use coverage apply to the following scenario?

The insured premises became "unfit to live in" due to a foul odor emanating from an adjacent apartment, caused by renovation work being done in the adjacent apartment.

— Kentucky Subscriber

Answer: Additional living expenses (ALE) apply when a loss covered under Section I of the policy makes the premises not fit to live in. Section I provides coverage for direct physical loss to the property in Coverages A and B. In order for coverage to apply, there must be damage to the covered property.

While there is no exclusion for odors coming from a neighboring residence, I'm not sure most odors are going to be considered direct physical damage. The smell of cooking cabbage may be very unpleasant, yet it's not a direct physical loss to the property. If, however, the odor from the neighboring premises is chemical in nature and permeates the residence so that the walls, etc., must be treated to remove the odor, versus simply opening the windows for a few hours, then ALE may apply.

See also: Top 10 ZIP codes for fire loss