Your insured asks, “If I do ‘X’, am I legally liable?” Or, “If ‘this’ happens, am I legally liable?” How do you answer questions like this?

While I retired from the Big “I” almost five years ago, I still participate in their Virtual University’s “Ask an Expert” service. This morning, we were presented with this question from an agent:

“Neighbor’s building had bricks fall off and damage my insured’s building. Not weather related, maintenance issue. I know the insured can go under his own coverage for RC, but is the other carrier liable for damages?

“One part of me says no, the neighbor didn’t know about the damage to their building so this would be like a tree falling on my insured’s roof.

“The other part of me says that if the bricks had hit a pedestrian, the building owner would have been liable so why is property damage different?”

My response:

You’re asking for a legal opinion. That needs to be specifically addressed to an attorney. All we can constructively comment on is whether there is liability coverage IF there is legal liability.

That being said, if a windstorm blows a healthy tree onto your insured’s roof, there is an argument that the other party is not liable. On the other hand, if the tree was dead and should have been removed, then there’s an argument that the other party’s failure to do so constituted negligence. In your case, IF the other party in your case failed to maintain his property and that failure resulted in damage to your insured’s property, then liability may exist.

Your insured is always free to make a claim or file a suit against the other party. However, even if they were successful, recovery is usually on an ACV, not replacement cost, basis so your insured might not recover in full depending on the cost to repair, depreciation, and other factors. If he bought RC coverage, then he likely has more coverage than he would get from the other party. He can recover from this own insurer and let the insurer subrogate if they choose to do so.

How do you response to such questions from your customers? Do you simply refer them to an attorney or do you provide some guidance with the caveat that you’re not an attorney and not providing legal advice?

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Bill Wilson

Founder at InsuranceCommentary.com
One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America. Reprint Request Information

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