An often-overlooked coverage on many policies, debris removal can be a very expensive portion on even seemingly small claims. We can no longer just come in with a backhoe and a dumpster and haul away the remains after a loss. There are many hazardous materials that need to be dealt with by someone certified to dispose of them. The presence of some of these materials may be known, while others may only be discovered at the time of a loss. The cost for debris removal can often run higher than the actual loss, and in the event of a total loss can be vastly under insured.
Here’s an example of a “small” claim – a water heater has reached the end of its life and leaks all over the first floor of a building. The damage is contained in a relatively small area of the building and has only affected the tile floor. The resulting loss is adjusted at $8,000.00 and there is a $1,000.00 deductible on the policy. The problem is the old flooring was installed in 1969 and the tile is vinyl asbestos. The cost to have an asbestos abatement contractor come in to remove and dispose of the tile is $25,000! The policy allows for 25% of the direct loss or $2,000.00 (8,000x.25=2,000). There is an additional $10,000.00 built into the policy for debris removal if the 25% allowance is inadequate or the policy limit has been exhausted. In this instance the policy would pay only $12,000.00 of the $25,000.00 debris removal cost, leaving $13,000.00 of the loss unpaid.
An example of a large claim would be a building with a $1,000,000.00 limit suffering a total loss. The cost allowed for debris removal would be limited to the $10,000.00 allowance as the limit for the building would be exhausted by the cost to rebuild the building.
We’ll be happy to review your current situation and help you decide the kind of coverage you should have, just give H&K Insurance a call at 800-890-5606 or email us.