Insurance Coverage 1

[WARose]

I got asked to look at a barn/tractor shelter that is (99% of the time) unoccupied. The owner is concerned because some of the wood girders are sagging more in recent years than they have been. I ran numbers on what I saw and concluded the design is inadequate. This building was built in 1968, I doubt it was engineered, and there are no drawings available.

I have directed the owner to do something about it.....but he doesn't want to do that because he has a "first rate" insurance policy on it....and if it collapses, the insurance (he thinks) will pay for it (as opposed to him putting up the cash for preventative repairs).

I have advised him to read the policy (especially the fine print) to be sure....and also I have expressed the opinion that this building is not only a danger to him (on the off chance he is under it when it happens) but also his equipment.

My question for this forum is: do policies typically cover something like this (i.e. something that wasn't engineered or underdesigned)? I know there are a lot of people here who do inspections....so I was curious as to their experience. The answer is in the policy....but I don't have access to it....so I wanted to hear what others have seen. Thanks.

 

[Tomfh]

I suspect he may be in for a surprise when his derelict old structure collapses. Most insurers arent especially interested in replacing structures that collapse due to lack of maintenance.

 

[WARose]

I suspect he may be in for a surprise when his derelict old structure collapses. Most insurers arent especially interested in replacing structures that collapse due to lack of maintenance.

The thing about it is: it appears to have been well maintained. (Fresh paint and all.) You wouldn't know (unless you ran numbers on it) what the real issue was.

If it does collapse.....I doubt he will mention to the insurance guy the fact I warned him.

 

[Tomfh]

Well, in that case, he may well get away with it. It all depends on whether the insurer can identify pre-existing defects/damage/neglect with which to blame it on.

We’ve had three cases of flood damage inspections lately, where insurers are saying it was the building’s fault it was damaged by flood, as opposed to the flood itself

Case 1: the front door wasn’t well sealed enough to stop flood water getting in, therefore owner didn’t take reasonable precautions. (Apparantly front doors are supposed to be watertight against 3 feet of water).

Case 2: the building has pre existing cracks from foundation movement, therefore, they weren’t paying for any of the much greater building movement that resulted from a flood

Case 3: the building slab, because it heaved badly due to flood, wasn’t properly designed, therefore no flood insurance for the structure itself.

 

[lexpatrie]

I don't think you're on the right issue. This is in danger of collapsing (somewhat), and you're recommending strengthening, so you think the hazard is significant enough to merit strengthening. Where is the AHJ. Hand the report to them. The other nice side effect is now it doesn't look like you're trying to extort this poor fellow for the engineering cost of repairs, either. HSW.

Generally if something collapses in a sudden and accidental fashion, it will have an engineer (of perhaps dubious skill) look at it.

Tom -

Case 1 - I am not aware of this design standard, and if it exists, was it in force at the time the building was constructed? The flood caused the damage. If this standard exists, I would very much like to know about it. Residential door construction is intentionally not that robust, by the way, so the fire department can break in and save you during a house fire.

Case 2 - "I don't feel like paying for flood damage" is not a causation decision.

Case 3 - this reasoning is backwards. It sounds a bit odd, anyway, as the slab usually just sits there during the flood while the rest of the structure floats away. In order for water to move the slab, there'd have to be a reasonably robust connection to the rest of the building for the forces to occur, and that contradicts the theory that the slab is inadequately designed. Was there undermining of the slab due to water driven erosion/scour or some similar factor that displaced the slab?

All of these need to be referred to the appropriate parties. State attorney general, public adjuster, or attorney dealing with property insurance.

If there is a design problem, generally, thematically, if the damage is caused during a storm or similar event, the insurer has the potential to recover against the designer due to the defect, but it's subrogation, they are supposed to pay for the loss. NOT THAT I AM AN ATTORNEY.

 

[Heaviside1925]

To answer your question OP, yes, I have seen insurance cover these situations in my neck of the woods. I am assuming, rural farm type building. Consider the insurance company agreed to write this policy in the first place. There would have been an inspection and if the company felt a building was too structurally deficient, then they would have provided a refusal for that building as part of the policy. If the homeowner has a valid policy and the insurance agreed to cover that building, then they would be required to pay out. Now, there may be small print about preexisting structural conditions not visible upon visual inspection....etc. but it would be on the insurance to prove this. If we're talking a 5 million dollar claim, it might be worth to the insurance company to hire an engineer and fight it out in court, but I strongly doubt there is the same cost benefit for what sounds like a pole barn. If the owner's building does collapse, it will likely be during some weather event, the insurance will write it off as an act of god and pay for a new pole barn and that will be it. This is a very common mind set among the farmers I am acquainted with. "Let if fall down, insurance will pay out". The areas I am familiar with are not under an AHJ, they are private farms and with such status are exempt from many of the statutory requirements commonly seen in any other operating business. Even if they are under an AHJ, then "making the farmers mad" is very politically unwise move, so normally very broad exceptions are granted that would not fly anywhere else.

 

[lexpatrie]

There would have been an inspection

It's a common misconception that buildings are typically (or always) "inspected" prior to coverage offers. This is simply not the case. Particularly in remote areas and agricultural properties. There's perhaps a state or two, or an insurance company or two that does pre-insurance inspections, but they are fairly rare. I actually had somebody on linkedin try to recruit me for something in this zone of service recently, (go look at barns, paraphrased) and it wasn't an engineering job.

I work a bit in this area, and I can tell you quite often there is
a) no engineer involved in a decision to deny a claim for a perceived defect, lack of maintenance, decay, etc. Regardless of "claim size."

As such, beyond sending an adjuster to look at the damaged building within a reasonable timeline, there's no "cost-benefit" analysis going on here in the decision to pay or not pay a claim.

The idea that things get "fought out in court" is also pretty far off reality. As I recall, there were only a thousand or so lawsuits that rose out of Katrina.

not under an AHJ,

No information from the OP on that subject, here.

 

[Heaviside1925]

I should have not used the word inspection. I agree, they are not inspected in the engineering sense. I was saying that typically a local policy writer (non-engineer) comes out to create a description of the property and structures and if a building is obviously structural deficient, i.e. very deteriorated roof, siding, listing badly, that this will be noted in the policy that that building is not covered. Of course you bring up a great point about location. Insurance laws vary greatly state to state, some much more consumer friendly, others vice versa. I can only speak to my area of the Midwest. I agree things getting "fought out in court" is an exception and does not happen often at all nor are actual cost benefit evaluations performed, what I was getting at was factors like these can play into the guidance a company gives it's claims adjusters. I will say the farmer lobby is quite powerful, and I am not saying that this has direct impact on insurance paying out or not but if insurance started denying these claims in certain states, I could see law makers being forced to take note and maybe action. I only brought up the AHJ issues because that seems to be a knee jerk solution many times and I was just offering a different reality of places I have lived where there is no AHJ or the AHJ is not supported locally and really does not have "authority" in that sense. That said, to answer OPs question, where I current reside, I am aware of cases of barns, that have obvious structural defect "i.e see it from the road", a nice storm roles through, barn ends up on the ground, six months later, the farmer has a new pole barn and insurance did indeed pay for it.

 

[WARose]

Thanks Heaviside. Good info

And to answer a question that has come up.....I have no idea what a "AHJ" is. This is a private farm in South Carolina (if that helps).

 

[Heaviside1925]

"Authority Having Jurisdiction" Local, county, state code enforcement agency. For me as an ME, when dealing with pressure vessel and such, it's typically a state agency. For a residential and business construction design and activities, it a local building code person/people/department, fire marshal and such. For rural SC, I have no idea how things are administered but unless you are near a larger city, there may not be any. This may be an over simplified and someone will likely copy and paste the SC or CFR definition, but I think you get what I am getting at.

That said, Lex brings up good points as well and speaking from a closer relationship to the insurance process that I have.

 

[Tomfh]

Lex, you’re barking up the wrong tree. The insurers said no for the spurious reasons I mentioned, at which point we were engaged by the clients to support the claims.

Often, clients will simply accept denials, so it helps the insurers bottom line to try it on.

 

[XR250]

Unless he is just lucky, I doubt the insurance will cover it if there was not a precipitating event such as extreme weather.
Insurance companies are getting smarter everyday and they will use any excuse to deny coverage.

 

[lexpatrie]

Reach out via an FAQ feedback comment if you want, Tomfh.

Yeah, there seems to be a bit of a "well let's try denying this, i mean it's a legit claim, but maybe they'll go away" going around. I forget where I read it, but one lawsuit there was actually a group that got together, took notes, and decided "eh, let's deny it and maybe they'll go away" was more or less in the record as to conduct. I saw another one where an engineering firm was actively seeking out other "experts" (engineers) and then telling them what to say. Really unethical.

 

[Brad805]

So much of this depends on the value of the claim. Small claim, good client that has been paying fees for eons, and they are likely going to cover it. If he has many pieces of expensive equipment in the shed at the time that is damaged things get more complicated. At that point they send out a better adjuster that looks at things closer. We all look at this technically, but insurance is a business, and they will look at it from a few different angles.

 

[XR250]

I work a bit in this area, and I can tell you quite often there is
a) no engineer involved in a decision to deny a claim for a perceived defect, lack of maintenance, decay, etc. Regardless of "claim size.

My associate spends over half his time doing site visits for insurance companies to determine if a claim is bogus or legit. They are mostly residential.