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December 6 – 8, 2022 |
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October 11, 2017

Builders’ Risk Claims and Deadlines Extensions Related to Hurricanes Harvey and Irma

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Economic Forecasts | Ethics and Compliance | Infrastructure and Transportation | Insurance and Surety | Latest News | Litigation Strategies/Dispute Resolution | News | Risk & Contract Management | Workforce and Labor
October 11, 2017

Builders’ Risk Claims and Deadlines Extensions Related to Hurricanes Harvey and Irma

Coverage depends upon the cause of the damage.

Two articles by Scott Van Voorhis in ENR.com discuss the insurance ramifications for contractors with projects affected by hurricanes Harvey and Irma. He addresses two related issues— builders’ risk coverage for property damage and contract deadline extensions.

According to Mr. Van Voorhis, “details tucked away in builder’s risk policies may spell the difference between financial relief and hardship for some contractors…The key issue is whether the damage was caused by ‘flood’ or by wind-driven rain or other sources, which can determine significantly how much the policy will pay towards repairing the damage.”

Definitions in a builders’ risk policy for each term establish the basis for the extent of coverage provided by insurers. There will almost certainly be litigation regarding the appropriate meaning of each term.

Both construction and insurance industry experts expect months of negotiations and litigation before settlements are forwarded to contractors.

Most construction contracts have a “force majeure” clause that allows contractors to renegotiate project deadlines if an “unforeseen natural disaster” makes it impossible to meet the deadline stipulations of the original contract.

“J.P. Vogel, partner at the law firm Gray Reed &McGraw,” explains that contractors must send the owner a “force majeure” letter to initiate a request for deadline extensions. This must be done as soon as possible after the disaster. “Some contractors will try to invoke the force majeure clause but will have no record of having done so earlier in the storm’s aftermath, making it harder to bargain” with the insurance provider. The settlement amount for these claims is also determined by whether flooding or wind-driven damage is determined to be the force majeure.

The author stresses, in both articles, that contractors who filed claims early are most likely to obtain satisfactory compensation for their losses.

Source—

After Hurricane Harvey, What Will Your Builder’s Risk Policy Pay For? Scott Van Voorhis, enr.com, Sept. 6, 2017.

Contractors in Hurricane Areas Will Seek Deadline Extensions, Scott Van Voorhis, enr.com, Sept. 20, 2017.

Economic Forecasts•Ethics and Compliance•Infrastructure and Transportation•Insurance and Surety•Latest News•Litigation Strategies/Dispute Resolution•News•Risk & Contract Management•Workforce and Labor

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