Construction Delays and Limiting Policy Language Impact Policyholders’ Recovery

Denise GillinConstruction, Risk Management

By Maureen Gallagher for AssuredPartners

Many property policies contain contractual limitation provisions. These policy provisions are valid and enforceable in most states. The provision limiting the amount of time policyholders have to complete the work paid for by their insurance company to one year is particularly problematic. When policy provisions like this exist, if the repair or replacement has not been completed within the time frame, the carrier only pays actual cash value (ACV). This is a fairly common provision. It should be noted that Ordinance and Law Increased Cost of Construction provision also has a time limitation to repair or replace, or there is no coverage for the increased cost of construction. Standard ISO language is two years, and other contracts limit to 365 days.

What can policyholders do if their policy has a repair time limitation provision?

Share this Post