Commercial policy (CP) holders: RTFP alert!
This time, reading the full policy will inform you about a potentially costly exclusion involving one of the most notorious – and toxic – building materials on the planet: asbestos.
Read the F#@*%ing Policy! Specifically, read the endorsements including the asbestos exclusion. Sometimes, the removal of asbestos is limited to certain “named perils”; other times, it’s a total property exclusion. Either way, it’s a big problem if you have a property loss and you have this exclusion.
For starters, one must test for asbestos before any demolition can begin. These test results will either confirm or deny the presence of asbestos incorporated into building materials. If the results are positive, then the workers in white suits are performing the demo at a premium cost. If there is no asbestos found, then it’s business as usual on the demo side of things.
Despite the general public being aware of its danger, asbestos remains widely prevalent. Any building built before 1970 might have it in the joint compound, in drywall, or in siding and floor tiles. But even new buildings can have it, due to imported drywall compound and other manufactured building products that skirt U.S. restrictions on the use of asbestos in manufacturing.
So, you might have it. And keep in mind that, because of its toxicity, the cost to remove asbestos is multiple times the cost of a general contractor removing a standard (non-asbestos) wet wall or other building element.
If this exclusion is in place, and it applies, you might have huge expenses. Regular demo (no asbestos) of a building might cost $20K, for example. But because asbestos is present, special regulated removal must take place – and that can cost upwards of $80K. Because of the asbestos exclusion, you will only be covered for $20K of demo costs – that is, the baseline demo costs. The asbestos-related extra costs are NOT covered.
Carriers insert this exclusion to minimize the amount they must pay out on a certain portion of a claim. Naturally, they want to minimize their exposure, and the asbestos exclusion protects them from paying the asbestos-inflated cost – sometimes 4-5 times the price of what debris removal and demo can be without asbestos.
Most insureds don’t know about the asbestos exclusion. A well-informed agent will make his or her customers aware, but not all do. When our clients have a loss, almost invariably they are unaware of having this exclusion. Their typical response after being informed about it: “How would I ever know to ask that question?”
That’s why it helps to RTFP. And when you do, take a close look for an endorsement containing an absolute asbestos exclusion.