Erschienen in Ausgabe 1-2018Unternehmen & Management

291. Debris Disposal Costs for Buildings

WORDS FOR THE WEEK

Von Keith PurvisVersicherungswirtschaft

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In property insurance „debris“ – pronounced as if it were a French word – means the wreckage that is left over after there has been property damage. Disposing of debris
can be a relatively simple, though expensive, task if it only consists of brick, stones or wood, but if the rubble contains plastic, pollutants or toxic substances, as is often the
case after a fire, with the attendant risk of environmental impairment, the disposal of debris is then an exacting legal requirement. Furthermore, if there has been an explosion,
the debris will not be in a neat pile, waiting to be taken away, but will be strewn over a wide area.

Debris removal costs (Aufräumungskosten) are the expenses incurred in collecting the wreckage, transporting it to a disposal site and having it recycled or destroyed. This
expense is covered by the property policy, provided the damage was caused by an insured peril in a named perils policy or not excluded in an all risks policy. Trees on the land
of an insured property are a special case. Their removal is not automatically covered, even if they damage a building they fall on, but this eventuality can be insured by special
arrangement. Debris disposal clauses do not cover the expense of preventive measures taken by policyholders.

Windstorms, for example are often announced in advance in the news, giving property owners time to cut down a weak tree they know could fall on their property or have
a vulnerable chimney stack repaired, thus saving the insurer – so the logic – the expense of a claim. Unfortunately, agreeing to policyholder reimbursement requests would
probably open the floodgates for many dubious claims.

Debris removal costs are almost always a percentage of the face value of the policy and are on top of the sum insured. Particularly for industrial and commercial risks in Germany,
there is no general rule about what that limit is. It depends on the particular situation, for example, the owner of an old block of flats who suspects it could contain asbestos,
will want a high limit for this clause. 

In the United States, where the exposure to natural perils is higher than in Europe, 25% of the sum insured is the standard amount available for debris disposal – but once again
this is negotiable. The relevant clause is complex, sometimes with extensive exclusions and includes provisions for co-operating with the authorities, with details about the handling
of environmental issues.