Debris Removal Insurance

What Is Debris Removal Insurance?

Debris removal insurance is a component of a property insurance policy that reimburses for clean-up costs associated with property damage.

Debris removal provisions in policies typically only cover debris caused by an insured peril, such as charred wood or twisted metal from a building fire.

How Debris Removal Insurance Works

Debris removal insurance policies frequently have a cap on how much a policyholder can be reimbursed for debris removal costs. While debris removal is typically included as a standard provision in policies, the policyholder is frequently able to purchase additional coverage. The policy provision could also include the removal of hazardous materials that may cover the property but may not include pollutants.

When calculating the many costs associated with repairing and replacing property after destruction or damage, the costs of removing debris and cleaning up are added to the value of the damaged property rather than being deducted from it. As a result, the impact on the total amount of the loss, as well as the coverage limitations on these costs in most standard property insurance policies, are frequently overlooked when arranging coverage at the outset.

Debris removal insurance is typically sold as "additional coverage" rather than as part of standard property insurance. Coverage is typically limited to 25% of the insurer's liability for direct property loss caused by a covered cause of loss, plus any applicable deductible (unless stated as otherwise in policy declarations).

A claim for debris removal is only payable if filed with an insurer within 180 days of the date of loss. It should be noted that expenses must be reported but not necessarily incurred within that time frame. This requirement should be met by a contractor's estimate, and it is critical to obtain the total amount in writing to present to the insurer.

History of Debris Removal Insurance

Debris removal costs are not mentioned as covered or excluded in the 1943 New York Standard Fire Policy or its predecessors.

This sparked debate, with some insurers routinely including these costs as part of the claim settlement and others rejecting or resisting payment, claiming that the cost was not a direct result of the loss and thus not covered.

A debris removal clause was added to the forms attached to the standard fire policy to clarify coverages. It simply stated that the coverage extended to include the cost of debris removal as a result of the property loss.

The debris removal coverage was within the liability limit and did not increase it. Debris removal costs were not taken into account when determining compliance with the policy's coinsurance clause; however, if a coinsurance penalty was found to apply, reducing the recovery of the property loss, customary adjustment practice was to apply the same limitation to the payment for debris removal.