Removal Of Debris – Sub Limit – How much is enough? With any reinstatement or repair of a building, it is necessary first to remove and/or dismantle the damaged section. This entails removing the damaged materials to a designated part of the worksite where it is typically thrown into a pile or, more likely to avoid double handling, placed into a waste skip. Although this is all part of the reinstatement/repair process, cover afforded by the normal policy wording would, in the absence of a Removal Of Debris clause, cease at this point, even though the Insured would still incur costs to remove the debris (or skip) from the property or a point adjacent to it. The Mark IV Modified ISR Section 1 – Material Damage Indemnity states that “subject to the liability of the Insurer(s) not being increased beyond the Limit(s) of Liability already stated herein, the Insurer(s) will also indemnify the Insured for Costs and expenses necessarily and reasonably incurred in respect of”: Item (i) states: The removal, storage and/or disposal of debris or the demolition, dismantling, shoring up, propping, underpinning or other temporary repairs consequent upon damage to property insured by this Policy and occasioned by a peril hereby insured against. The word ‘debris’ is not defined in the Mark IV policy wording. Its ordinary meaning as recorded in The Macquarie Dictionary is: “the remains of anything broken down, or destroyed; ruins; fragments; rubbish…”.The Removal of Debris clause is likely to cover considerably more than just waste transportation and disposal costs. At times there will be also be requests to extend this section by the addition of the words “or the decontamination” after the words “disposal of debris”. The underwriter would need to carefully consider whether there was any asbestos used in the construction of the premises, since, due to the precautions that need to be taken, the costs involved in the removal of asbestos, necessary for the decontamination, are considerable. Following a major fire, the police, fire brigade investigators or the state forensic scientists and the Insurers’ own investigators for that matter, may require a section of the building to be propped up or some of the debris removed to allow for a thorough investigation into the cause. The practice has been that even though the costs may increase due to this work, Insurers will still meet these costs subject to liability for the claim being ultimately accepted. The reason for this is obvious; the Insurer will benefit from knowing the actual cause of the loss, if it can be determined. This is mentioned to remind those who are selecting a Sub-Limit, to ensure it is adequate to include this eventuality. In fact, an inadequate Removal of Debris Sub-Limit occurs far too often.  There are several reasons for this besides an increase due to the investigation into cause, yet many brokers and Insureds appear to choose 10% of the Declared Value for replacement as the default. This ‘rule of thumb’ is not always a good guide; with the involvement of say asbestos it can often be more than 20% of the full replacement value of the building. Having asbestos present is not the only cause for concern. The contents of the building also need to be considered. The Environmental Protection Authority (“EPA”) can insist on very stringent procedures to remove debris (chemicals etc), including the burying of the contaminated material in large concrete canisters. This can in some circumstances result in the cost of removing the debris exceeding the cost of rebuilding the damaged building. The Industrial Special Risks policy also covers the clean-up at the Situation and the premises, roadways, waterways, parks, rail lines etc. in the vicinity that are affected by the debris.  Item (ii) states: The lnsured’s legal liability in respect of removal, storage and/or disposal of debris, notwithstanding Excluded Peril 8 [the general exclusion for legal liability] in relation to premises, roadways, services, railway or waterways of others, consequent upon damage to the Property Insured by a peril hereby insured against for such costs together with the cost of cleaning provided that such liability was not assumed by the Insured under an agreement entered into after the commencement of the Period of Insurance or any renewal thereof unless liability would have attached in the absence of such agreement. Provided that the insurance under this section does not extend to any liability that the Insured may incur as a consequence of pollution of any kind.  In one case that LMI were appointed to, the final cost for Removal of Debris was $1.6 million because of the contamination of nearby waterways (note this was not a pollution liability event). This is the big exposure and it may well be prudent to obtain a quotation and or advice from a specialist demolition contractor who can look at the exposure at the site and give you a considered opinion on likely costs. Item (iii): The demolition and removal of any property belonging to the Insured which is no longer useful for the purpose it was intended, providing such demolition and removal is necessary for the purpose of the reinstatement or replacement of Property Insured under this section and is consequent upon damage to the Property Insured by a peril hereby insured against If it were not for this wording, an Insurer may be required to take down and safely store any item that the Insured no longer requires, if it is in the way of the repair, even though it may be of no benefit to the Insured. No doubt commonsense would prevail, and Insurers may be willing to simply dump something rather than spend money storing it. However, this wording avoids the need for negotiation, and such property can simply be dumped “providing such demolition and removal is necessary for the purpose of the reinstatement or replacement of Property Insured under this section and is consequent upon damage to the Property Insured by a peril hereby insured against” A final point to bear in mind is that under the Mark IV ISR policy wordings, Removal of Debris is not subject to co-insurance. However, the Sub Limit and overall Limit of Liability need to be adequate to ensure the policy fully indemnifies the Insured. In summary, it is not good practice to simply set the Sub-Limit for Removal of Debris as a percentage of the estimated cost of rebuilding. The adequacy of the building value, its construction, the presence of asbestos, location, surrounding areas and the type of stock and contents must be taken into consideration to ensure that the Insured is fully protected.