Hard working men on roofMany liability insurance policies exclude coverage for bodily injury or property damage arising out of structural alterations that involve changing the size of or moving buildings or other structures, new construction or demolition operations performed by or on behalf of the named insured. Construction insurance policies typically cover these risks, not general liability policies. A question that arose in a recent coverage dispute concerned whether replacing the roof of a structure during renovations of a building fell within the exclusion for injuries arising out of demolition operations.

The policyholders purchased a building out of foreclosure, which required extensive renovations. Part of the renovations including tearing off the old roof and installing a new roof. In this case, the roof was brought down to its existing decking and then new plywood and shingles were installed on top of the original roof decking. In the course of the renovation work, an employee of the roofing contractor was injured when a piece of plywood fell on him. He sued the policyholders and they sought defense and indemnification from their insurer.

The insurer disclaimed coverage for defense and indemnification based on the policy exclusion precluding coverage for bodily injuries arising out of demolition operations. The insurer argued that tearing off the shingles and the plywood and bringing the roof down to its original decking was a demolition operation and, therefore, the underlying claim (which had been reduced to a judgment in favor of the worker against the policyholders) was not covered because of the exclusion.

In rejecting this argument, the court held as follows: “Simply put, as a matter of law, routine tear off and replacement of a roof does not constitute demolition.” The court supported its conclusion by pointing out that it was undisputed that the property was under renovation and that the removal of the shingles and plywood was for purposes of repairing and restoring the roof, not to demolish the building.

Moreover, the court explained the heavy burden resting on the insurer to show that the exclusion was stated in clear and unmistakable language, was subject to no other reasonable interpretation, and applied to the facts of the case. Here, the court found that the insurer did not meet its burden. The court also noted a number of cases where the definition of demolition had been defined as the complete tear down, razing or destruction of an entire building. Given that this was not a tear down, but an extensive renovation to bring the property back to working order, the exclusion for demolition operations did not apply. Accordingly, the court granted summary judgment to the policyholders.

The insurer bears the burden to demonstrate that a loss comes within an exclusion. This case shows that this is a heavy burden.

The case is Herbert v. Dryden Mut. Ins. Co., No. 0864/11 (N.Y. Sup. Ct., Tompkins Cty., Jan. 4, 2017).