This week, we have a “Buyer Beware” reminder for those shopping for an insurance policy. SMW was recently retained on a major fire loss suffered by the owner of a 20,000 sq. ft. commercial property. We immediately got to work, completing a comprehensive policy review, followed by a walk-through of the loss site with the insurance company. It was agreed upon by all parties that this was indeed a total loss.
But, prior to any demolition commencing, the state of Massachusetts demands that a building be tested for asbestos. In this case, the siding and drywall came back “hot” – meaning it was positive for the presence of asbestos contained in the building materials. Unfortunately, this insured’s policy contained an absolute asbestos exclusion incorporating property. When three demo bids came back to us at an average of $500k apiece, we asked these vendors what the demo would have cost without the presence of asbestos – we were told: roughly $200k.
So, the insured was out of pocket for the difference of $300k. What’s the takeaway here? Make sure the insurance policy you purchase does not contain this exclusion – it can end up being as toxic as the asbestos it is excluding. You may pay more for your premium. But it can save you tons of money in the long run should you ever have an asbestos-laden loss.
Check out more about this exclusion here: https://swerling.com/the-absolute-asbestos-exclusion-another-reason-to-read-the-whole-policy/