There are many different types of insurance.  Under the category of commercial insurance is an insurance called Builders Risk Insurance.

Buildings under construction create unique coverage problems which builders risk insurance attempts to alleviate.  Because builders risk insurance forms are designed to cover buildings or structures under construction, they attempt to specify the point at which construction is deemed to be completed and when coverage ceases.  At that point, the building owner needs to obtain a BPP or other comparable property coverage to replace the builders risk policy.

The builders risk form covers the building or structure being built, building materials and supplies intended to become a permanent part of the building, and temporary structures.  Like the BPP, the builders risk form must be combined with the basic, broad or special cause of loss form and any necessary endorsements to form a complete policy.

Insurance lawyers practicing law in urban areas will usually be around a lot of condominiums.  Most people do not realize there is insurance that is specifically for condominiums.

Two Insurance Services Office (ISO) commercial property forms have been designated for condominium property exposures:

  1. Condominium Association Coverage Form; and

Any insurance lawyer who handles many cases will see situations where the insurance agent is simply a criminal.  The Insurance Journal has published two stories where an agent has been convicted for his actions.

The first one is from June 2016 and is titled, Texas Insurance Agent Arrested In Scam Targeting Elderly Clients.  The story tells us about a Lubbock based insurance agent being arrested and charged with defrauding elderly victims through an annuity scam.

The Texas Department of Insurance reported that Joseph Allen Gaines was arrested last month on charges that he kept clients’ money that was intended to be used to purchase annuities.

Another type of coverage that insurance lawyers see is called, Special Form Coverage.  Special Form Coverage is the broadest form commercial coverage.  The special form provides “all risk” insurance which covers any accidental cause of loss unless specifically excluded by the policy.

The special form contains the following exclusions, which are also contained in the basic form and broad form:

1) ordinance or law

When an insurance attorney gets a new client on an insurance related claim, one of the first things he wants, is a copy of the policy to read.  And when he reads the policy, he wants to know what the exclusions are that are in the policy.

The basic form and broad form business policy contains exclusions.  In fact, the many pages of an insurance policy are, when read, pages explaining what is excluded or limitations on what will be paid.  Sample exclusions on the broad form are:

  1.  Ordinance or law — When a building is not in compliance or conformity with local building codes or laws and must be rebuilt or replaced, local laws require that the new structure conform to current requirements.  Because ordinance or law exposures are not anticipated by basic premium rates, the cause of loss forms contain an ordinance or law exclusion, which excludes any part of a loss resulting from the enforcement of any ordinance or law regulating the construction or repair of property.  This is discussed in the 1962, Texas Supreme Court opinion styled, Employers Mutual Casualty Co. of Des Moines v. Nelson.

Like all property insurance policies, the Business Personal Property (BPP) policy imposes a number of duties on the insured.  Insurance attorneys will tell these duties constitute conditions precedent to coverage; that is, the insured must comply with these requirements before the insurance company is obligated to pay any loss.  This requirement was made clear in the 1999, 5th Circuit opinion styled, Griggs v. State Farm Lloyds.  These duties generally include:

  1.  the insured must provide notice to the insurer of the loss
  2.  the insured must preserve the property as much as possible

Lawyers who handle commercial insurance claims can tell you that the most common type of commercial property insurance is the Building & Personal Property Coverage Form.

The Building & Personal Property (BPP) coverage form is the most commonly used policy to insure commercial buildings and contents.  Covered perils for the BPP are listed in separate cause-of-loss forms.

The BPP generally covers:

What is the difference between replacement cost and actual cash value.  Knows the difference can mean many thousands of dollars on a claim.

Pursuant to the 1998, Austin Court of Appeals opinion styled, Great Texas County Mutual Insurance Co. v. Lewis, “replacement cost” is when the insurer pays the insured the “amount necessary to repair or replace” the damaged property with another “of like kind and quality.”  The insurer is agreeing to restore the property to a condition substantially the same as that existing before the damage was sustained.

In Great Texas, the court said that replacement cost is a measure of loss that does not allow for depreciation.  As an example, the Great Texas case involved damage to a car engine.  The insurer calculated the cost of repair to be $3,608.27.  From this amount the insurer subtracted a deductible of $527.00 and $2,031.72 for betterment or depreciation, leaving $1,049.55, which the insurer offered the insured to discharge its obligation under the property damage section of the policy.  The court stated that, because the car was a functioning or operating automobile before the damage, the insurer was required to pay an amount necessary for the repair or replacement of an automobile of that character.  If the insurer were allowed to to discharge its obligation by paying the insured $1,049.55, the insured would not have a sum sufficient to restore his engine and automobile to a functioning or operating state.  Therefore, the insurer was required to pay the cost of a remanufactured engine without deducting for betterment or depreciation.

People will speak of “sticker shock” in reference to buying automobiles.  The term is also used when seeing hospital bills.  But the biggest shocker of all can be the bill for an air ambulance.

The Claims Journal published an article in February of 2018.  The article is titled, Appellate Court Rules Insurers Not On The Hook For Air Ambulance Reimbursement Rates.  It discusses a case from the Austin Court of Appeals.  Here is what it tells us.

The Austin Court of Appeals issued a decision in a case involving the high prices that air ambulances charge Texas workers’ compensation insurers.