Builder’s Risk Policies and the Contractor’s Tools Exclusion

Tower cranes are commonly utilized in the construction of any tall, vertical building. What happens if there is damage to the tower crane as the result of a storm during construction?

In a recent case, a contractor was constructing a 74-story skyscraper in New York. The contractor was utilizing a tower crane. The tower crane was damaged from Hurricane Sandy. A claim was submitted under the builder’s risk policy.

The Court of Appeals of New York held that the tower crane was NOT covered under the builder’s risk policy as it was excluded by the contractor’s tools exclusion in the policy. See Lend Lease (US) Const. LMB Inc. v. Zurich American Ins. Co., 2017 WL 572478 (N.Y. 2017).

The contractor’s tools exclusion at-issue stated:

[t]h[e] Policy does not insure against loss or damage to … Contractor’s tools, machinery, plant and equipment including spare parts and accessories, whether owned, loaned, borrowed, hired or leased, and property of a similar nature not destined to become a permanent part of the INSURED PROJECT*, unless specifically endorsed to the Policy.

The Court found that the tower crane constituted machinery and fell within this contractor’s tools exclusion.

This contractor’s tools exclusion is a routine exclusion in builder’s risk policies.

Based on this decision, contractors that utilize tower cranes need to appreciate that a builders risk policy, absent any endorsement otherwise, is probably not going to cover damage to a tower crane caused by a storm or other peril. Thus, there needs to be crane insurance or a floater insurance to ensure damage to the crane is covered by such perils.

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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