Debris Removal and Pollution Damage

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...materials that require special handling) and $4,000 for the building.

Applying the limits separately, the 25 percent limit of debris removal on the contents is $22,500 ($50,000 x 25% plus $10,000)—$3,500 less than the cost of debris removal. Meanwhile, the cost of debris removal for the building loss ($4,000) is well below the available limit of $12,500 ($30,000 x 25% plus $10,000). The insured recovers $3,500 less than the total amount of the loss.

However, there is no basis in the wording of the debris removal additional coverage for treating the various items of coverage separately. The language speaks only of debris of covered property at each location resulting from a covered cause of loss and, in applying the debris removal limitation, does not differentiate between debris of buildings or of personal property.

So in the example given above, the insured has an $80,000 property loss, and $25,000 of debris removal expense. The policy will pay debris removal expense of 25 percent of the $80,000 loss ($20,000) plus $10,000, or $30,000, or more than the entire cost of debris removal. The $10,000 debris removal coverage above the $150,000 combined limits of insurance will not be a factor in this loss. But this interpretation works against the insured when property loss plus debris removal exceeds the limit of insurance for two or more items at a single location, because the $10,000 additional limit applies only once to the entire loss at the location instead of to each item separately.

The answer is to project a worst - case scenario of the possible property loss plus debris removal expense, and set the limits of in- surance accordingly—including, when needed, the purchase of ad- ditional debris removal coverage.

“While debris removal coverage will pay for pollution cleanup and decontamination of covered buildings and personal property, it does not apply to the cost to extract ‘pollutants’ from land or water, or remove, restore or replace polluted land or water. Pollutant cleanup and removal is a separate additional coverage.”


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