An ounce of prevention is worth a pound of cure: Review your insurance policies to ensure protection

The tragedy at Champlain Towers in Surfside, Florida, that left nearly 100 dead after a condo building collapsed, prompted immediate concern for condo and building owners throughout Florida. Now, that concern has stretched beyond that state, to tens of thousands of structures across the country, many of which were built during the initial U.S. condo-building boom in the 1960s. While the tragedy has caused associations to revise their current reserve structure and increase reserves in older buildings, it has also prompted many buildings to hire consultants to inspect and prepare condo-building reviews to ensure the safety of their buildings. As evidenced by a recent complaint filed by an insurer in the Champlain Towers tragedy, those consultants and engineers hired to inspect and prepare those building reports need to scrutinize their and their client’s insurance policies to ensure they have the proper coverage.

Morabito Consultants inspected the Champlain Towers in 2018 and prepared a 2018 structural engineering report on behalf of the association prior to its collapse in preparation for the 40-year recertification of its structural integrity. Since the tragedy, eight personal injury and property damages claims have been filed against Morabito by families of the victims, accusing Morabito of inadequate inspection and oversight. In response, one of Morabito’s insurers has filed an action seeking a declaration that it is not obligated under certain commercial general liability policies and umbrella policies to provide coverage for the lawsuits – which would force Morabito to pay defense costs and potential damages from its own pocket. 

The insurer argues that that there are numerous exclusions in the primary insurance policy which precludes coverage for Morabito for damages including exclusions arising from the rendering or failure to render professional services. The insurer also claims that the umbrella policies have similar provisions including an exclusion for property damage arising out of a structural “collapse hazard.” 

Morabito’s 2018 engineering report had revealed that that the building had major structural damage and needed to be extensively repaired. The report cited issues with the pool deck area, including improperly installed waterproofing under the ground floor and abundant cracking and spalling of concrete columns, beams, and walls in the parking garage. Morabito’s follow up inspection in 2020 resulted in a memorandum that indicated that the concrete around the pool and in other places at the condominium had significant deterioration. 

While consultants and engineers will see a greater demand for their services and reap that benefit, they need to ensure the appropriate insurance coverage and polices are in place so as to protect themselves.

Reach out to one of our attorneys to discuss the appropriate insurance policy review.