Articles Posted in Property Damage

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iStock-623269348-ai-robotics-thumbs-down-300x175Artificial Intelligence (AI) is a hot topic in industries from manufacturing to the medical profession. Developments in the last ten years have delivered AI technology, once a fiction reserved for the movies, to private corporations and even to everyday homes. Examples include:

  • 2004 Defense Advanced Research Projects Agency (DARPA) sponsors a driverless car grand challenge. Technology developed by the participants eventually allows Google to develop a driverless automobile and modify existing transportation laws.
  • 2005 Honda’s ASIMO humanoid robot can walk as fast as a human, delivering trays to customers in a restaurant setting. The same technology is now used in military robots.
  • 2011 IBM’s Watson wins Jeopardy against top human champions. It is training to provide medical advice to doctors. It can master any domain of knowledge.
  • 2012 Google releases its Knowledge Graph, a semantic search knowledge base, likely to be the first step toward true artificial intelligence.
  • 2013 BRAIN initiative aimed at reverse engineering the human brain receives $3 billion in funding by the White House, following an earlier billion euro European initiative to accomplish the same.
  • 2014 Chatbot convinced 33% of the judges it was human and by doing so passed a restricted version of a Turing Test.

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A critical step in a property insurance claim is the investigation undertaken by the insurer to gather information about the claim. Insurers generally have obligations and rights to conduct a prompt iStock-614037306-300x174investigation of claimed losses, but policyholders often do not fully understand the investigation process or coverage issues it raises. They may not review the policy requirements to understand their obligations with respect to the claims process. This post addresses insurance coverage considerations when the insurer wishes to investigate your claim for loss under a property policy.

Of course, you can’t change the unfortunate fact that you’re facing a loss, but there are certain steps that you can take before, during and after an investigation to put yourself in the best possible position for coverage under your policy.

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As James Taylor might say, I’ve seen fire and I’ve seen rain, but will my insurance cover the damage? California has certainly seen plenty of fire and rain. In the aftermath of the state’s most recent iStock-175506009-mud-slide-300x200devastating events, damages are estimated to top $5 billion. As Californians file insurance claims to cover their losses, coverage for flooding and mudslide damage has come into focus.

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A critical component of any insurance policy is of course its limit, which is usually the most an insurance company must pay for a loss. But many property insurance policies include “sublimits” that provide a lower limit for particular losses.

iStock-535435283-sub-300x200Identifying the sublimits in a policy is usually straightforward since they typically appear in a list or chart in the policy’s declarations section. Sublimits generally fall into one of two types: (1) sublimits that apply to particular perils, like flood, Named Storm or earthquake; and (2) sublimits that apply to a type of damage or cost, like debris removal or preservation of property. There are many different perils and costs that a policy may sublimit, and sublimits appear in many types of policies (including, for example, sublimits for coverage for wage and hour claims under an employment liability policy). However, this blog will focus on property policy sublimits. Because many property policies include sublimits that apply to storm-related losses, they may particularly be an issue for companies damaged by hurricanes like 2017’s Harvey, Irma, Jose and Maria.

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An unexpected or catastrophic loss can force any company out of business, even if it is insured.  You must understand your company’s risks and how your insurance policies cover those risks in order to manage them and maintain stability.

Having the correct insurance in place is only the first step. Property and business interruption insurance policies are often complex, and your suppliers, customers and other business partners’ insurance situation may have a direct impact on you as well.  Even if your business doesn’t suffer any direct physical damage to its facilities following a natural disaster or other loss, your customers or suppliers may have, and that could result in what is known as a “supply chain” or “contingent business interruption” loss of revenue and sales.  If you are unprepared when a disaster strikes, you may miss out on substantial amounts of insurance coverage to which you may be entitled.  The time to prepare is before a disaster occurs.  Take the time now to understand your insurance coverage and other risk transfer methods and opportunities.  Know your rights.  And put a plan in place to protect yourself, your employees, and your property before the loss occurs.  Then, if disaster strikes, you’ll be in a better position to make it through and to access your insurance coverage to help restore operations.

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As the powerful storm that is Hurricane Harvey looms in the Gulf of Mexico, Houston attorneys Vince Morgan and Tamara Bruno discuss what businesses and other organizations in the affected area should do immediately in order to maximize insurance recovery.

Key Takeaways:

    • Category 3 Hurricane Harvey is projected to have sustained winds of 120 m.p.h. and disastrous amounts of rain, with a possible storm surge.

 

    • Business interruptions are already happening in advance of Harvey’s landfall.

 

  • Policyholders should take key steps to maintain and maximize insurance coverage for Harvey-related losses.
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Is damage resulting from faulty workmanship covered under your CGL policy? In the past, insurers have had success in certain jurisdictions arguing that construction defect cases did not constitute iStock-117230091-300x236a covered “occurrence” because the damage was purportedly not unintended or unexpected. In recent years, however, courts have shifted course; the majority of courts have found that property damage arising out of faulty workmanship constitutes an “occurrence” under standard-form CGL policies. Additionally, some states enacted legislation requiring CGL policies to define occurrence to include property damage or bodily injury resulting from faulty workmanship, or have made it easier for insureds to obtain coverage for damages as a result of work the insureds performed.

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In 1173, builders broke ground in Pisa, Italy, on the Torre de Pisa (that is, the Tower of Pisa). At over 183 feet, it was to be a grand statement—remember, this was 1173, not 2016.

Torre Inclinada de Pisa

But the story is not all roses. The tower began immediately to tilt—by the time they started laying just the second floor of the tower, it was leaning. Thus, it earned the name we all now know (and love?), “Torre pendent di Pisa”—the Leaning Tower of Pisa. Wikipedia explains, “[t]he tower’s tilt began during construction, caused by an inadequate foundation on ground too soft on one side to properly support the structure’s weight. The tilt increased in the decades before the structure was completed, and gradually increased until the structure was stabilized (and the tilt partially corrected) by efforts in the late 20th and early 21st centuries.” The tower now leans over 12 feet from the vertical axis.

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After tearing through the Caribbean, Hurricane Matthew’s path brought it north to the southeastern coast of the United States, bringing evacuations, business closures and damages to the region. In the storm’s aftermath, colleagues Tamara Bruno, Colin Kemp, Peter Gillon, Vince Morgan and Joe Jean discuss important steps to take to maximize insurance recovery following such an event.

 

 

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Business Interruption insurance provides the policyholder with important peace of mind—it covers lost business arising from unexpected damage to the policyholder’s property. But what if the damage isn’t to the policyholder’s own property—what if the losses arise because of damage a supplier or customer suffers? When a link in your supply chain breaks, Contingent Business Interruption or “CBI” coverage can step in to replace it.Weak Link

CBI coverage, like Business Interruption coverage, is a property insurance extension that addresses lost income suffered due to an interruption of business. Instead of focusing on loss or damage suffered by the insured on its own property, however, CBI coverage addresses “contingent” losses, or losses that involve suppliers or customers. A CBI loss is a loss that results from damage to a supplier or customer that prevents the supplier from providing its goods or services to a policyholder or prevents a customer from receiving the policyholder’s goods or services. This coverage is crucial for policyholders whose business depends upon supply chains, customers or other “streams of commerce” for commercial success. Over the past few years, we’ve seen a spike in the number of CBI claims made by policyholders. During the same timeframe, however, we’ve also seen an increase in the number of coverage disputes related to CBI coverage. Although the concept is fairly straightforward, recovering for CBI losses often isn’t.

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