Champlain Towers Collapse – A Public Adjuster’s View
As the Champlain Tower collapse unfolds, people must understand this is a very fluid situation. Now is not the time to be pointing fingers but instead supporting the victims' families and conducting a thorough and objective investigation.
That being said, as a 45-year veteran of insurance adjusting in Florida, I have seen and been involved in all types of condo claims in Florida for decades. I concur, water is the cause or should I say the most frequent cause of all insurance losses. Water damage has and still is occurring and causing failures of building components particularly in ocean side concrete structures. This problem is ubiquitous in Florida. While most are not catastrophic as occurred at The Champlain South Tower, many other damaged buildings meet the test (and still do) of collapse when applied to insurance policies with the old collapse coverage clause which was simply "substantial structural impairment of a building or a part of the structure that was hidden and caused by hidden decay" and a few other listed items not common to Florida conditions. The definition did not require the building to fall down, and it was very favorable to policyholders. The insurance industry then came out with a defense along the lines of "did you know or should you have known based on the conditions and if so, you do not have coverage.” These claims were almost always settled but then the insurance industry changed the policy language requiring a full collapse as occurred in this instance.
I have seen and inspected hundreds of these buildings across the state of Florida and it is shocking how many have rusting rebar, spalling concrete, rusted post tension cables and the caps that hold the cables in place. As the media follows the inspections, investigations and hearings that are likely to occur, other condo communities hopefully will benefit from this terrible tragedy by doing their due diligence and stop the infighting that almost always results when the dreaded “assessment” word is mentioned at board meetings and general sessions of the owners.
One final word on property insurance collapse coverage. In my opinion, if the insurance industry had not changed the policy language and the old policy collapse provisions were in place, condominium associations all over the state could have noticed their insurer even if there were a suspicion of conditions such as rusted rebar, spalling of concrete, etc., which would have required the insurance carriers to send out adjusters and engineers to make inspections which would have been paid for by the insurance carrier under what is commonly called loss expense, which simply means that cost does not reduce the policy limits but is billed as a business expense for the insurance carrier.
Unfortunately condominium associations all over Florida will likely be paying for the cost of professional engineering, etc., out their pockets going forward due to the fear that has risen as a result of this event in Florida. Don’t get me wrong, this South Florida tragedy is a wake-up call for communities all over the country that may have signs of concrete degradation in the form of concrete spalling, rust stains, or other indications such as cracks in a slab or deflection of structural building components.
Finally, while there is a clear collapse of this building, the question in my mind is if the insurance carrier on this risk will raise a defense that this association knew or should have known of the conditions and therefore did not mitigate the expected damages. I doubt this will happen given the high profile of this event, but folks need to be aware of insurance policy requirements to mitigate damages. There has been talk about the full policy limits being tendered which is what should happen. If Law & Ordinance Coverage is in the building policy, while there is almost always a requirement that this coverage requires the cost to be incurred, the insurer of Champlain Towers should waive this policy condition of the cost being incurred first before being paid and pay up front all other available proceeds from the policy paid to whatever trust or other forum is set up to protect the rights of the owners in this building.
In closing I do not want to get policyholders’ hopes while they begin a process to deal with any issues that are of concern going forward, but I can tell you that while the insurance industry did a good job in crafting forms that took away the old collapse coverage, there are still some policies that due to a mistake or lack of knowledge of the form changes made several years ago, may still in fact have coverage based on the old requirement that coverage only requires something less than a literally full collapse as in the South Florida matter. Bottom line, read your policy and any endorsements. I recently took on a case where there was clear structural damage and the building had not collapsed. A close reading of my client's policy and a lack of endorsements meant this loss was covered. This insurer based in the midwest had failed to update their forms, which resulted in a significant payment to my very happy client.
If you have questions regarding any property insurance claim related issues please call 866.281.3642 or contact us to submit a question to one of our public adjuster insurance claim experts.