Insurance coverage Q&A: When the tenants' property must be moved

We have a water loss in a three-story apartment building where a contractor broke a sprinkler in the attic. Water damage impacted all three floors (12 units), and the insurance carrier agreed to cover the damages including removing drywall, flooring and appliances etc., to allow access for repairs.

The carrier did pay for temporary housing for the residents. However, the carrier denied the portion of the claim involving pack out and storage of the residents’ contents while repairs are being performed to allow access. The carrier states the residents are responsible for moving and storing their own contents.

We are not presently asking the carrier to replace tenant contents, we are asking for costs to cover work access to include moving and storing contents.

Is access to make covered repairs not fundamentally a part of the coverage(s) involved?

In the policy on page 56 of 113 we find in relation to ‘access’:

2. We will pay for loss or damage by “fungus,” wet or dry rot or bacteria. As used in this limited coverage, the term loss or damage means: a. Direct physical loss or damage to covered property caused by “fungus,” wet or dry rot or bacteria, including the cost of removal of the “fungus,” wet or dry rot or bacteria; b. The cost to tear out and replace any part of the building or other property as needed to gain access to the “fungus,” wet or dry rot or bacteria; and c. The cost of testing performed after removal, repair, replacement or restoration of the damaged property is completed, provided there is a reason to believe that “fungus,” wet or dry rot or bacteria are present.

What are the reasonable expectations for access to make covered repairs?

— Virginia Subscriber

Because of the covered loss, the tenants’ property has to be removed to repair the damage. This is not an option for which the tenant has a choice, and it is required as part of the loss repair; thus coverage should extend to moving and storing of the tenants’ property.

The limited coverage for fungus, dry rot, wet rot or bacteria would only apply if the property has to be removed for remediation of that cause of loss. If that is the case, then the coverage would again extend to the removal of any property (including property of others) to gain access to the fungus/rot/bacteria.

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