My client is insured on an Insurance Services Office commercial property special causes of loss form, with the ordinance and law coverage endorsement. Recently there was a fire loss which damaged a portion of the building.

My state requires that pipes must now be pressure tested to a much higher limit than normal usage, and meter bars must be installed. There is no problem in doing this in the damaged portion of the building, since the ordinance and law coverage responds. However, when the pipes in the undamaged portion were pressure tested, they blew.

The adjuster denied the claim for the blown pipes, stating that since the building is old, wear and tear was the cause of the loss, and therefore excluded. Shouldn't the blown pipes be covered under the ordinance and law endorsement?

New York Subscriber

Repairing the pipes blown by pressure testing in the undamaged portion of the building is not addressed by the ordinance and law endorsement. The coverage for loss to the undamaged portion of the building is limited to demolition or construction or repair which is governed by ordinance or law. Nothing was being demolished, repaired, or constructed, so the endorsement does not respond.

This is not to say your insured is not covered for the loss. Coverage is found under the special causes of loss form. Wear and tear, which is a gradual, on-going process, did not cause the loss—pressure testing did. Accidental damage from pressure testing (explosion, presumably) is not excluded, so the loss to the pipes is covered.