Water Loss Repairs Responsibility
of Building Owner or Contents Owner?

Q

Our insured owns a building and recently there was a water loss to various rooms. The contents in these rooms are owned by a different entity and not covered under our insured's policy (a standard commercial property coverage form). The contents were not damaged by the water.

The insurer's adjuster said that the contents owner must move the contents in order for the repair work to the building to begin. I included the cost to move the contents in our insured's claim. The adjuster said that the insured's policy would not cover such costs, but I say that the contents have to be moved to effect repairs and so the costs are covered.

What do you think?

Indiana Subscriber

A

We agree with you that the repair of the insured's property should include moving the contents of the rooms even if the insured does not own the contents.

There is nothing in the policy specifically addressing this issue, but, under the loss payment clause of the policy, the insurer promises to pay the cost of repairing or replacing the lost or damaged property; or, to pay to repair, rebuild, or replace the property with other property of like kind and quality. If the insurer is to accomplish this, the contents have to be moved. So the question is: who pays for the moving?

The insured as the owner of the building is responsible for the upkeep of the building. The owner of the contents is in no way responsible for the damage done to the building. Therefore, why should the contents owner pay for moving his contents just so that the owner of the building can have maintenance done on the building? It is true that the owner of the building is not liable for the damage done to the building, but, as noted, he is responsible for the upkeep of the building. His insurance covers the loss to the building and repair work due to that loss and if that repair work cannot be done unless contents are moved, the building insurance policy should pay for that move. This is especially true since there is no exclusion or limitation on the policy that would prevent such a payment.

Also, the policy has an appraisal clause. If the insured and the insurer disagree on the value of the amount of loss, the insured can make a written demand for an appraisal. If the insurer refuses to include the cost of moving the contents in order to repair the damage to the building, the insured should demand an appraisal.

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