The insured sustained a water line break in commercial building, and the adjuster for the Ins Co elected to hire its own contractor to proceed with mitigation. Unfortunately, the contractor did inadequate asbestos testing and started removing materials which resulted in the release of asbestos. Our position is that once the insurer elected to repair, they must complete theproject in restoring building back to pre-loss condition regardless to limitations or exclusions. Your thoughts.
To clarify, the insured did not hire contractor, the insurance company selected and hired the contractor, under the loss settlement provision. When insurer starts the repair process without consent of Insured, don't they need to completed project back to pre – loss condition?
New York Subscriber
The insurance policy is a contractual agreement between the insurer and the insured. The first part of the Loss Payment condition of the ISO property form CP 00 10, states the following:
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...
If any part of the loss payment condition is not adhered to in accordance with the policy terms and conditions, it is a violation of the policy contract and should be handled accordingly.
If the insurer hired the contractor, then the contractor was working by and on behalf of the insurer, not the insured, and as such the insurer has assumed responsibility for the contractor's work. The insured has no contract with the contractor unless they signed or agreed to the contractor to do the work on their property. The insurer should seek restitution from the contractor for the faulty work done on their behalf.
If a third party (the contractor) damages the insured's property, then that is a third party liability situation and the insured may submit a claim for damages under their general liability policy.
We are not legal representatives and can only interpret policy language. You may wish to seek legal counsel in this matter.