Summary: Coverage for insureds with construction exposures beyond the limited parameters of the building and personal property coverage form is accomplished through use of the simplified language builders risk forms and endorsements listed below. The policy may be used to cover the interest of the building owner; the contractor; or the interests of both, as their interests may appear.
The forms and form numbers are:
CP 00 20 10 00 builders risk coverage form
CP 11 05 06 95 builders risk reporting form
CP 11 06 11 85 builders risk adjustment form
CP 11 13 06 95 builders risk renovations
CP 11 14 07 88 builders risk—separate or sub-contractor's exclusion
CP 11 15 07 88 builders risk—separate or sub-contractor's coverage
CP 11 20 10 00 builders risk—collapse during construction
A complete builders risk contract is formed by combining the builders risk coverage form, CP 00 20, with a declarations page, common policy and commercial property conditions forms (see Common Policy Conditions and see Commercial Property Conditions), causes of loss form (see Causes of Loss), as well as any of the endorsements selected from the list above.
The one exception to the modular format of the commercial property program is the standard property policy CP 00 99 10 00. It is a self-contained unit that includes causes of loss and applicable conditions and is used for insuring risks for which the coverage under the other forms of the program is too broad. Endorsement CP 11 99 is used to modify the standard property policy for builders risk coverage.
Topics covered:
General eligibility and rules
Builders risk coverage form CP 00 20
Covered property
Property not covered
Covered causes of loss
Additional coverages
Debris removal
Preservation of property
Fire department service charge
Pollutant clean up and removal
Coverage extensions
Building materials and supplies of others
Sod, trees, shrubs and plants
Exclusions and limitations
Limits of insurance
Deductible
Loss conditions
Additional conditions
Definitions
General Eligibility and Rules
Builders risk coverage is written for a minimum one year term to cover a new building or structure under construction or an existing structure undergoing additions, alterations, or repairs. The rules in the commercial lines manual (CLM) state that policy inception should begin no later than the date that construction “starts above the level of the lowest basement floor” or, if there is no basement, the date construction begins. The rules permit pro rata cancellation when construction is completed, whether or not insurance on the completed structure is rewritten in the same company or companies. If the policy is cancelled before the structure is completed, the general cancellation provisions found in the common policy conditions apply.
The rules specifically provide that builders risk coverage can be written on exposures during construction that may not be eligible for certain coverages when occupied, the rationale being that buildings eligible for builders risk coverage are commonly unoccupied; therefore, eligibility criteria that depend on occupancy or use do not apply during the course of construction. Boarding or rooming houses (with a maximum of four units), dwellings, and farm properties are examples of such exposures.
Blanket insurance, covering more than one building or structure, is subject to the rating rules for such coverage. This is useful for housing projects and other large risks with several units being erected at the same time.
Builders Risk Coverage Form CP 00 20
CP 00 20 is the basic avenue to builders risk coverage in the simplified language commercial property program. The amount of coverage is based on the value of the building upon completion (including the value of permanent fixtures and decorations). Insurance on that value is provided from the outset of construction until coverage ceases. When coverage ceases is discussed later in this article.
Covered Property
A. Covered Property
We will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss.
1. Covered Property
Covered Property, as used in this Coverage Part, means the type of property described in this section, A.1., and limited in A.2., Property Not Covered, if a Limit of Insurance is shown in the Declarations for that type of property:
Building Under Construction, meaning the building or structure described in the Declarations while in the course of construction, including:
a. Foundations;
b. The following property:
(1) Fixtures and machinery;
(2) Equipment used to service the building; and
(3) Your building materials and supplies used for construction;
provided such property is intended to be permanently located in or on the building or structure described in the Declarations or within one-hundred feet of its premises:
c. If not covered by other insurance, temporary structures built or assembled on site, including cribbing, scaffolding and construction forms.
Analysis
Covered property (for which a limit of insurance must be shown in the declarations) includes the building or structure while in the course of construction, and extends to foundations and certain items of property intended to become a permanent part of the building while located in, on, or within 100 feet of the described premises. Such items include fixtures, machinery and equipment to service the building, as well as building materials and supplies owned by the insured. (See the theft coverage limitation, below, that applies to building materials and supplies.) In addition, if temporary structures that are built or assembled on site are not covered by other insurance, they are considered covered property. Temporary structures include cribbing, scaffolding, and construction forms.
The phrase “in the course of construction” is not defined on the form; therefore common usage should prevail. (According to Webster's Third New International Dictionary, “construction” is “the act of putting together to form a complete integrated object; fabrication.”) However, in Patton v. Aetna Insurance Company, 595 F. Supp. 533 (1984), the term was construed to include activities related to, but prior to actual construction. The case concerned a builders risk policy issued to cover a building scheduled for renovation. At the time of a fire loss, only preparatory work towards the renovation had been done by the insured. This included removing the furnace and lattice work; unhooking the gas and plumbing lines; and engaging in discussions with contractors regarding the lowering of the building. A United States district court in Mississippi determined that since the insured and the insuring company understood that renovation of the house was intended, it was reasonable to interpret “construction” to mean alterations of any type, whether additions or removals. As a result, the activities of the insured were considered to be construction and thereby covered under the provisions of the builders' risk policy.
Under form CP 00 20, coverage for material and supplies owned by others is limited to $5,000—an additional amount of insurance—at each described premises. See Coverage Extensions section, following.
Property Not Covered
2. Property Not Covered
Covered Property does not include:
a. Land (including land on which the property is located) or water;
b. The following property when outside of buildings:
(1) Lawns, trees, shrubs or plants;
(2) Radio or television antennas (including satellite dishes), and their lead-in wiring, masts or towers; or
(3) Signs (other than signs attached to buildings).
Analysis
Land and water are specifically excluded from builders risk coverage as is the following outdoor property (though it is possible to purchase coverage for these items by endorsement): lawns, trees, shrubs, plants; radio or television antennas, including lead-in wiring, masts or towers; and detached signs.
Although coverage for land and water is excluded, form CP 00 20 contains a pollutant clean up and removal clause that provides limited coverage for the extraction of pollutants from land or water at the described premises; see Additional Coverages discussion, which follows later in this article.
Covered Causes of Loss
3. Covered Causes Of Loss
See applicable Causes of Loss Form as shown in the Declarations.
Analysis
The builders risk coverage form employs the commercial property program's causes of loss forms, CP 10 10 10 00 (basic), CP 10 20 10 00 (broad), and CP 10 30 10 00 (special). See Causes of Loss.
Additional Coverages
There are four additional coverages under the builders risk form: debris removal; preservation of property; fire department service charge; and pollutant clean up and removal.
Debris Removal
This part of CP 00 20 has been changed as part of the ISO commercial property program revision. The debris removal section of CP 00 20 is the same as on the commercial property form, CP 00 10 10 00. For information and analysis of the current debris removal provisions, see Building and Personal Property Coverage Form.
Preservation of Property
b. Preservation of Property
If it is necessary to move Covered Property from the described premises to preserve it from loss or damage by a Covered Cause of Loss, we will pay for any direct physical loss or damage to that property:
(1) While it is being moved or while temporarily stored at another location; and
(2) Only if the loss or damage occurs within thirty days after the property is first moved.
Analysis
If a covered cause of loss creates the need to move covered property to preserve it from further loss or damage (by a covered cause of loss), the policy covers that property while it is being moved or temporarily stored, but only if the loss or damage occurs within thirty days of the property being moved.
Fire Department Service Charge
c. Fire Department Service Charge
When the fire department is called to save or protect Covered Property from a Covered Cause of Loss, we will pay up to $1,000 for your liability for fire department service charges:
(1) Assumed by contract or agreement prior to loss; or
(2) Required by local ordinance.
No Deductible applies to this Additional Coverage.
Analysis
Without applying a deductible, the policy will pay up to $1,000 for fire department service charges assumed by contract or prior agreement or which are required by local ordinance.
Pollutant Clean Up and Removal
d. Pollutant Clean Up and Removal
We will pay your expense to extract “pollutants” from land or water at the described premises if the discharge, dispersal, seepage, migration, release or escape of the “pollutants” is caused by or results from a Covered Cause of Loss that occurs during the policy period. The expenses will be paid only if they are reported to us in writing within 180 days of the date on which the Covered Cause of Loss occurs.
This Additional Coverage does not apply to costs to test for, monitor or assess the existence, concentration or effects of “pollutants”. But we will pay for testing which is performed in the course of extracting the “pollutants” from the land or water.
The most we will pay under this Additional Coverage for each described premises is $10,000 for the sum of all covered expenses arising out of Covered Causes of Loss occurring during each separate twelve month period of this policy.
Analysis
The builders risk policy contains a pollutant clean up and removal clause that provides limited coverage for the extraction of pollutants from land or water at the described premises. Coverage applies only if the discharge, dispersal, seepage, migration, release or escape of pollutants occurs during the policy period and results from a covered cause of loss. The term “pollutant” is the only specifically defined term in the policy, and means “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.”
Note that there is no coverage for costs to test for, monitor or assess the existence of pollutants; however, costs of testing performed in the course of extracting the pollutants is covered.
The most the insurer will pay under this additional coverage is $10,000 during each separate twelve month period of the policy.
Coverage Extensions
The builders risk policy contains two coverage extensions: (a) building materials and supplies of others; and (b) sod, trees, shrubs and plants.
Building Materials and Supplies of Others
a. Building Materials and Supplies of Others
(1) You may extend the insurance provided by this Coverage Form to apply to building materials and supplies that are:
(a) Owned by others;
(b) In your care, custody or control;
(c) Located in or on the building described in the Declarations, or within 100 feet of its premises; and
(d) Intended to become a permanent part of the building.
(2) The most we will pay for loss or damage under this Extension is $5,000 at each described premises, unless a higher Limit of Insurance is specified in the Declarations. Our payment for loss of or damage to property of others will only be for the account of the owner of the property.
Analysis
Coverage for material and supplies owned by others is limited to $5,000—an additional amount of insurance—at each described premises and losses to property of this kind are settled for the account of the owner of the property. In order for this coverage extension to apply, the property of others must be in the insured's care, custody or control and located in or on the described building, or within 100 feet of the premises.
The property must be intended to become a permanent part of the building, which precludes coverage for the builder's machinery and equipment. Builders risk coverage form CP 00 20 was released in 1986 with no separate item of coverage for builders machinery, tools, and equipment as was found on the previous builders risk forms. According to explanatory information from ISO, the provision was deleted because broader coverage is available through inland marine policies.
However, the current edition of the form provides limited coverage for builders' machinery, tools, and equipment owned by or entrusted to the insured when special causes of loss form CP 10 30 is attached to the builders risk coverage form. The coverage appears in item 3.d. under the limitations section (C) of the special causes of loss form. This coverage allows for specified perils coverage to builders' machinery, tools, and equipment whether the items are on or off the described premises. (Note that when the revised special causes of loss form is attached to any of the other property forms of the commercial property program, a similar provision serves to limit coverage for the specified causes of loss only while the machinery, tools, and equipment are away from the described premises.)
A higher limit than $5,000 is available, but must be specified in the declarations.
Sod, Trees, Shrubs and Plants
b. Sod, Trees, Shrubs and Plants
You may extend the insurance provided by this Coverage Form to apply to loss or damage to sod, trees, shrubs and plants outside of buildings on the described premises, if the loss or damage is caused by or resulting from any of the following causes of loss:
(1) Fire;
(2) Lightning;
(3) Explosion;
(4) Riot or Civil Commotion; or
(5) Aircraft.
The most we will pay for loss or damage under this Extension is $1,000, but not more than $250 for any one tree, shrub or plant. These limits apply to any one occurrence, regardless of the types or number of items lost or damaged in that occurrence.
Analysis
Sod, trees, shrubs, and plants are specifically property not covered under the builders risk policy, however, limited coverage for these items is given under coverage extension b. Such items are covered for the perils of fire, lightning, explosion, riot or civil commotion or aircraft. Coverage is limited to $1,000 per occurrence, regardless of the types or number of items lost, with a limit of $250 for any one tree, shrub, or plant.
Exclusions and Limitations
B. Exclusions and Limitations
See applicable Causes of Loss Form as shown in the Declarations.
Analysis
Three causes of loss forms are available for use with the builders risk policy, a basic, broad and special form. Each of those forms carries their own exclusions and limitations. For details, see Causes of Loss.
Limits of Insurance
C. Limits of Insurance
The most we will pay for loss or damage in any one occurrence is the applicable Limit of Insurance shown in the Declarations.
The most we will pay for loss or damage to outdoor signs attached to buildings is $1,000 per sign in any one occurrence.
The limits applicable to the Coverage Extensions and the Fire Department Service Charge and Pollutant Clean Up and Removal Additional Coverages are in addition to the Limits of Insurance.
Payments under the Preservation of Property Additional Coverage will not increase the applicable Limit of Insurance.
Analysis
Limits under the builders risk policy are determined by the applicable limit of insurance stated in the declarations. Outdoor signs attached to buildings are covered for $1,000 in any single occurrence. Limits applicable to the coverage extensions and fire department service charge and pollutant clean up and removal additional coverage are in addition to the policy limits stated in the declarations; however, payments under the preservation of property additional coverage fall under—and do not increase—the stated policy limits.
Deductible
D. Deductible
In any one occurrence of loss or damage (hereinafter referred to as loss), we will first reduce the amount of loss if required by the Additional Condition—Need For Adequate Insurance. If the adjusted amount of loss is less than or equal to the Deductible, we will not pay for that loss. If the adjusted amount of loss exceeds the Deductible, we will then subtract the Deductible from the adjusted amount of loss, and we will pay the resulting amount or the Limit of Insurance, whichever is less.
When the occurrence involves loss to more than one item of Covered Property and separate Limits of Insurance apply, the losses will not be combined in determining application of the Deductible. But the Deductible will be applied only once per occurrence.
Example No. 1:
(This example assumes there is no penalty for underinsurance.)
Deductible: $1,000
Limit of Insurance – Bldg. 1: $60,000
Limit of Insurance – Bldg. 2: $80,000
Loss to Bldg. 1: $60,100
Loss to Bldg. 2: $90,000
The amount of loss to Bldg. 1 ($60,100) is less than the sum ($61,000) of the Limit of Insurance applicable to Bldg. 1 plus the Deductible.
The Deductible will be subtracted from the amount of loss in calculating the loss payable for Bldg. 1:
$60,100
- 1,000
59,100 Loss Payable – Bldg. 1
The Deductible applies once per occurrence and therefore is not subtracted in determining the amount of loss payable for Bldg. 2. Loss payable for Bldg. 2 is the Limit of Insurance of $80,000.
Total amount of loss payable: $59,100 + 80,000 = $139,100
Example No. 2:
(This example, too, assumes there is no penalty for underinsurance.)
The Deductible and Limits of Insurance are the same as those in Example No. 1.
Loss to Bldg. 1: $70,000 (exceeds Limit of Insurance plus Deductible)
Loss to Bldg. 2: $90,000 (exceeds Limit of Insurance plus Deductible)
Loss Payable – Bldg. 1: $60,000 (Limit of Insurance)
Loss Payable – Bldg. 2: $80,000 (Limit of Insurance)
Total amount of loss payable: $140,000
Analysis
The deductible provision offers details of how the deductible would be applied in the event of a loss under CP 00 20. The insurer first applies what is, in effect, a coinsurance condition on the amount to be paid and then, applies the deductible. The adequate insurance condition acts as a coinsurance clause and is to be read and used in conjunction with this deductible clause; this condition is discussed later.
The deductible clause also notes that the deductible is applied only once per occurrence. This addresses the issue of how many deductibles are applied should more than one piece of covered property be damaged in the same occurrence.
Loss Conditions
There are six loss conditions applicable to the builders risk form: abandonment; appraisal; duties in the event of loss or damage; loss payment; recovered property; and valuation.
E. Loss Conditions
The following conditions apply in addition to the Common Policy Conditions and the Commercial Property Conditions.
1. Abandonment
There can be no abandonment of any property to us.
2. Appraisal
If we and you disagree on the value of the property or the amount of loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser. The two appraisers will select an umpire. If they cannot agree, either may request that selection be made by a judge of a court having jurisdiction. The appraisers will state separately the value of the property and amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each party will:
a. Pay its chosen appraiser; and
b. Bear the other expenses of the appraisal and umpire equally.
If there is an appraisal, we will still retain our right to deny the claim.
3. Duties In The Event Of Loss Or Damage
a. You must see that the following are done in the event of loss or damage to Covered Property:
(1) Notify the police if a law may have been broken.
(2) Give us prompt notice of the loss or damage. Include a description of the property involved.
(3) As soon as possible, give us a description of how, when and where the loss or damage occurred.
(4) Take all reasonable steps to protect the Covered Property from further damage, and keep a record of your expenses necessary to protect the Covered Property, for consideration in the settlement of the claim. This will not increase the Limit of Insurance. However, we will not pay for any subsequent loss or damage resulting from a cause of loss that is not a Covered Cause of Loss. Also, if feasible, set the damaged property aside and in the best possible order for examination.
(5) At our request, give us complete inventories of the damaged and undamaged property. Include quantities, costs, values and amount of loss claimed.
(6) As often as may be reasonably required, permit us to inspect the property proving the loss or damage and examine your books and records.
Also permit us to take samples of damaged and undamaged property for inspection, testing and analysis, and permit us to make copies from your books and records.
(7) Send us a signed, sworn proof of loss containing the information we request to investigate the claim. You must do this within sixty days after our request. We will supply you with the necessary forms.
(8) Cooperate with us in the investigation or settlement of the claim.
b. We may examine any insured under oath, while not in the presence of any other insured and at such times as may be reasonably required, about any matter relating to this insurance or the claim, including an insured's books and records. In the event of an examination, an insured's answers must be signed.
4. Loss Payment
a. In the event of loss or damage covered by this Coverage Form, at our option, we will either:
(1) Pay the value of lost or damaged property;
(2) Pay the cost of repairing or replacing the lost or damaged property, subject to b. below;
(3) Take all or any part of the property at an agreed or appraised value; or
(4) Repair, rebuild or replace the property with other property of like kind and quality, subject to b. below.
We will determine the value of lost or damaged property, or the cost of its repair or replacement, in accordance with the applicable terms of the Valuation Condition in this Coverage Form or any applicable provision which amends or supersedes the Valuation Condition.
b. The cost to repair, rebuild or replace does not include the increased cost attributable to enforcement of any ordinance or law regulating the construction, use or repair of any property.
c. We will give notice of our intentions within thirty days after we receive the sworn proof of loss.
d. We will not pay you more than your financial interest in the Covered Property.
e. We may adjust losses with the owners of lost or damaged property if other than you. If we pay the owners, such payments will satisfy your claims against us for the owners' property. We will not pay the owners more than their financial interest in the Covered Property.
f. We may elect to defend you against suits arising from claims of owners of property. We will do this at our expense.
g. We will pay for covered loss or damage within thirty days after we receive the sworn proof of loss, if you have complied with all of the terms of this Coverage Part; and (1) We have reached agreement with you on the amount of loss; or (2) An appraisal award has been made.
5. Recovered Property
If either you or we recover any property after loss settlement, that party must give the other prompt notice. At your option, the property will be returned to you. You must then return to us the amount we paid to you for the property. We will pay recovery expenses and the expenses to repair the recovered property, subject to the Limit of Insurance.
6. Valuation
We will determine the value of Covered Property at actual cash value as of the time of loss or damage.
Analysis
The loss conditions section contains several provisions that are fairly standard in commercial property policies, and are identical or similar to those found in the commercial property policy CP 00 10; for more information on the loss conditions, see Building and Personal Property Coverage Form.
Note that the cost to repair specifically does not include increased costs attributable to any ordinance or law regulating the construction of any property. Also, valuation of damaged property is on an actual cash value basis.
Additional Conditions
F. Additional Conditions
The following conditions apply in addition to the Common Policy Conditions and the Commercial Property Conditions.
1. Mortgageholders
a. The term mortgageholder includes trustee.
b. We will pay for covered loss of or damage to buildings or structures to each mortgageholder shown in the Declarations in their order of precedence, as interests may appear.
c. The mortgageholder has the right to receive loss payment even if the mortgageholder has started foreclosure or similar action on the building or structure.
d. If we deny your claim because of your acts or because you have failed to comply with the terms of this Coverage Part, the mortgageholder will still have the right to receive loss payment if the mortgage holder:
(1) Pays any premium due under this Coverage Part at our request if you have failed to do so;
(2) Submits a signed, sworn statement of loss within sixty days after receiving notice from us of your failure to do so; and
(3) Has notified us of any change in ownership, occupancy or substantial change in risk known to the mortgageholder.
All of the terms of this Coverage Part will then apply directly to the mortgageholder.
e. If we pay the mortgageholder for any loss or damage and deny payment to you because of your acts or because you have failed to comply with the terms of this Coverage Part:
(1) The mortgageholder's rights under the mortgage will be transferred to us to the extent of the amount we pay; and
(2) The mortgageholder's right to recover the full amount of the mortgage holder's claim will not be impaired.
At our option, we may pay to the mortgageholder the whole principal on the mortgage plus any accrued interest. In this event, your mortgage and note will be transferred to us and you will pay your remaining mortgage debt to us.
f. If we cancel this policy, we will give written notice to the mortgageholder at least:
(1) ten days before the effective date of cancellation if we cancel for your non-payment of premium; or
(2) thirty days before the effective date of cancellation if we cancel for any other reason.
g. If we elect not to renew this policy, we will give written notice to the mortgageholder at least ten days before the expiration date of this policy.
2. Need For Adequate Insurance
We will not pay a greater share of any loss than the proportion that the Limit of Insurance bears to the value on the date of completion of the building described in the Declarations.
Example No. 1 (Underinsurance):
When: The value of the building on the date of completion is $200,000
The Limit of Insurance for it is $100,000
The Deductible is $500
The amount of loss is $80,000
Step 1: $100,000 divided by $200,000 = .50
Step 2: $ 80,000 x .50 = $40,000
Step 3: $ 40,000 – $500 = $39,500
We will pay no more than $39,500. The remaining $40,500 is not covered.
Example No. 2 (Adequate Insurance):
When: The value of the building on the date of completion is $200,000
The Limit of Insurance for it is $200,000
The Deductible is $1,000
The amount of loss is $80,000
The Limit of Insurance in this Example is adequate and therefore no penalty applies. We will pay no more than $79,000 ($80,000 amount of loss minus the deductible of $1,000).
3. Restriction of Additional Coverage – Collapse
If the Causes Of Loss – Broad Form is applicable to this coverage form, Paragraph C.1.b.(6) of the Additional Coverage – Collapse does not apply to this coverage form. If the Causes Of Loss – Special Form is applicable to this coverage form, Paragraph D.2.f. of the Additional Coverage – Collapse does not apply to this coverage form.
4. When Coverage Ceases
The insurance provided by this Coverage Form will end when one of the following first occurs:
a. This policy expires or is cancelled;
b. The property is accepted by the purchaser;
c. Your interest in the property ceases;
d. You abandon the construction with no intention to complete it;
e. Unless we specify otherwise in writing:
(1) ninety days after construction is complete; or
(2) sixty days after any building described in the Declarations is:
(a) Occupied in whole or in part; or
(b) Put to its intended use.
Analysis
Insurers consider builders risk coverage to be ended when the insured occupies the structure because builders risk rates do not contemplate the increased exposures of a premises that are occupied. No definition of occupied is supplied. In the past, courts have often held that a building is not considered occupied until it is put to the practical and substantial use for which it was designed, thus defining occupied as synonymous with a building being put to its intended use. The current policy language distinguishes between occupancy and a building being put to its intended use, so that coverage ceases in either case.
An example of a case decided under previous policy language is Fireman's Fund Insurance Company v. Millers' Mutual Insurance Association, 451 F.2d 1140 (1972). In that case, one insurer had written a builders risk policy for the contractor and the other had permanent insurance for the building owner. A fire destroyed a building only a few days after the owner had moved in, but while the contractor still had some corrective work to do. The insurers settled the loss equally with the building owner and then asked the court to determine whether the builders risk policy or the permanent policy should apply. The lower court's ruling in favor of the builders risk insurer was upheld by a federal district court of Oklahoma which agreed that the evidence showed that the building had been “put to a practical and substantial use for the purpose for which it was designed,” that it was thus “occupied” by the insured and that the builders risk coverage was thereby terminated.
However, as shown in the following case, it was possible under language that did not distinguish between occupancy and use for insureds to occupy a portion of the property that was under construction and maintain their builders risk coverage. In Hartford v. Riefolo Construction Company, 410 A.2d 658 (1980), where the school board made use of a school building that was 95 percent completed, the New Jersey court held that the building was still “in the course of construction” since the remaining work to be done prevented its use as a school. The current policy's distinction between a building that is occupied or put to its intended use will make such outcomes much less likely.
Definitions
G. Definitions
”Pollutants” means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.
Analysis
This is the standard definition of pollutants found in the ISO coverage forms. The definition is very broad in its scope, allowing an insurer to include just about anything under the terms of the definition. However, some courts are now limiting its application to environmental hazards and those substances that the government officially lists as pollutants.
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