Faulty, Inadequate, or Defective Maintenance or Construction

This is the most important of the three categories of exclusions. The essential theme of this category is that coverage does not apply to losses that are the result of poor design, planning, siting, construction, materials, or maintenance. The message communicated by this exclusion is two-fold. First, if another person or third party causes the loss, the insured’s remedy is to sue them, not to look to his or her own property insurance. Second, if the cause of loss is the insured’s own failure to maintain his or her property—too bad. This body of exclusions puts the burden on the insured not only to maintain his or her property to assure the existence of coverage, but also to take due care in assessing the quality of property before 76 The Complete Book of Insurance purchase and the competence of persons with whom the insured contracts to perform remodeling or reconstruction. This would also exclude problems developing from do-it-yourself remodeling or construction projects where loss results from defective design, materials, or construction. Under this exclusion lie four subcategories. The first precludes coverage for faulty, inadequate, or defective planning, zoning, development, surveying, or siting. In other words, the subcategory precludes coverage for errors by governmental bodies, real estate developers, and design professionals such as geologists, soils engineers, and architects. The purpose of this exclusion is to cause losses of this nature to be borne by the party whose errors or misjudgments are the cause of loss. Problems that would fall under this exclusion could take years to develop, leaving the insured seemingly without remedy against the party at fault due to statutes of limitations. However, under the ensuing loss clause, if the nature of the damage caused by this category of exclusions is covered, coverage will exists. For example, a soils engineer’s failure to identify an ancient landslide results in subsidence damage, no coverage exists. If there is subsidence damage that ruptures a gas line and the dwelling is destroyed by a fire, coverage would then exist. The second of the four subcategories of this exclusions precludes coverage for faulty, inadequate, or defective…design, specifications, workmanship, repair, construction, renovation, remodeling, grading, or compaction. There is some obvious overlap with this group of exclusions with the previous group, particularly with respect to design and specifications. This group of exclusions goes more to loss caused by age than the actual construction of the dwelling. Notably, this exclusion applies not only to loss arising from defective original construction, but also defective repair, remodeling, and renovation. The presence of this exclusion is the reason to choose remodeling or repair contractors carefully, and to take care that if you do your own remodeling or repair work, it is done correctly and in compliance with building codes. The ensuing loss clause again provides an exception to this group of exclusions for ensuing loss by a covered peril. However, merely defective work will not result in coverage. Exclusions 77 The third subcategory of these exclusions precludes coverage for faulty, inadequate, or defective, materials used in repair, construction, renovation or remodeling. There is some overlap between this subcategory and the previous subcategory. This exclusion focuses on loss caused by improperly chosen or defective materials, as opposed to defective performance of the work. The ensuing loss clause restores coverage for loss within this exclusion for ensuing losses that are caused by covered perils. The fourth and final subcategory of this group of exclusions is for loss resulting from faulty, inadequate, or defective maintenance of part or all of any property whether on or off the residence premises. The ensuing loss coverage will restore coverage for ensuing losses caused by covered perils.

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