Property Insurance & Ensuing Loss Exception

If you own real estate (or have owned real estate), then you know about property insurance.  If you developed real estate, then you know about the form of property insurance called builder’s risk insurance.

Property insurance polices (like all types of insurance policies) contain exclusions delineating what the policy will NOT cover.  It can get confusing determining what is covered versus what is not covered.  This is the reason why counsel can provide value to help you maximize insurance coverage.

Notwithstanding, property insurance policies may contain an ensuing loss exception to an exclusion.  For example, think of a windstorm exclusion where the policy may have language that it will not cover damaged caused by a windstorm.  This windstorm exclusion may have an ensuing loss exception to the exclusion saying that the policy will not cover damage caused by a windstorm BUT if the windstorm results in a loss / damage that sets in motion another loss / damage that would be covered under the policy, then there would be coverage for the other loss/ damage.  I told you…confusing!

For example, say a windstorm damages an HVAC system.  The damage to the HVAC system would NOT be covered per the windstorm exclusion.  But, say the damage to the HVAC system caused a fire that resulted in damage to other parts of the property.  The fire damage (the ensuing loss) would be covered (provided the policy covers fire damage).

The ensuing loss exception may apply to other exclusions in the policy so be sure to understand the application of any ensuing loss exception in your policy.

Please contact David Adelstein at or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.


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