This insurer is exempted under its policy for $19 million in renovation and restoration of a deteriorating school building.
When the roof of an Iowa elementary school collapsed, she turned to her insurer for help.
Lowell Elementary School was originally built in 1931. The roof itself was preserved, as was the building in question. However, after the collapse on February 20, 2019, the school found that the building had been constructed in three tiers.
Aging mortar within the load-bearing middle layer combined with a violent snowstorm led to decay and collapse.
The school then had engineers inspect the buildings on its property. They determined that the building with the roof collapse was not safely habitable without making repairs outside of the damaged area. The entire building would need to be brought into compliance with current building regulations prior to use.
In May 2020, the school began demolishing the building in hopes of rebuilding it resiliently.
Lowell Elementary turned to Employers Mutual Casualty Co. for coverage.
The insurer agreed to pay the initial cost of the collapsed roof but refused to cover the reconstruction project. It said its policy did not provide coverage for deterioration in old age outside of the collapse area.
Lowell Elementary’s school district, the Waterloo Community School District, sued Employers Mutual in court. The lawsuit sought a $19 million payout for work done to code the school building.
Employers Mutual reiterated that its policy would not cover damage or deterioration outside of the initial breakdown. It moved that the suit be dismissed.
In the lower court, the judge overseeing the hearing granted Employers Mutual summary judgment, agreeing that “the policy excludes loss or damage from aggravation.”
“Construing this policy to cover the cost of repairing undamaged portions of the building to bring the building up to current building codes would cause insurers to reassess premiums for older buildings, or worse,” the judge noted , “to refuse them at all.”
Scorecard: Employers Mutual is not on the hook for $19 million to renovate and restore a deteriorating building under its policy.
Conclusion: The infrastructure in America is a mixture of old and new. Insurers do their best to price and cover accordingly, but those who own older buildings should also be vigilant to avoid age-related losses. &
Autumn Demberger is a content strategist at Risk & Insurance®. She can be reached at [email protected]
