Debris of Removal / Clearance of Debris (CAR Munich RE)

In nearly all cases of material damage on construction sites, it is neces­sary for the area to be cleared and cleaned up before the actual repairs can be started. The question arises again and again as to whether the cost of removing wreckage or cleaning up the site, eg cleaning away flood debris, is to be included in the cost of remedying the material damage or whether it is only insured under “clearance of debris”.

In Munich Re’s Standard CAR policy, Section I – Material Damage, it is stipulated that the cost of clearance of debris can only be reimbursed if a separate sum therefor has been agreed upon, meaning that this cover is on a first loss basis only and is not granted unless it is applied for separ­ately and an additional premium is paid.

In any examination of the question of indemnification, a very clear distinc­tion must be made between repair work on the one hand and removal of debris, clearing up and cleaning up on the other. In order to be able to differentiate between these terms, it is necessary to define them.

Debris is to be understood as

  1. damaged parts of contract works,
  2. parts that are undamaged, but have become unusable and have to be demolished and removed before the repairs to damaged parts can begin,
  3. foreign materials, such as rubble, bed load or mud, which cover a com­pleted construction, there being no distinction made between material that is scoured on the site itself or washed in from the surrounding terrain.

    These definitions reveal that any operation concerned with removing wreckage, clearing and cleaning up the site comes under clearance of debris. It is to be seen as a purely financial loss and not covered under material damage so that a separate limit is required. This corresponds to the nature of the CAR insurance policy, which is meant to cover nothing but material damage to the insured contract works.

    In other words, clearance of debris is only insured if a separate limit of liability has been agreed on in accordance with Section I, item 4. Material damage as such is covered under Section I, item 1 of the CAR policy.

    The following example will serve to make this distinction clear:

    When a construction site is silted up but cleaning operations alone are necessary, there is no material damage as such and therefore this cannot be seen as damage to the insured object, as only cleaning operations are required and not repairs. In the same way, the cost of clearing up after material damage has occurred is not seen as the cost of remedying the material damage itself, meaning that this is not the cost of repairs.

    In our interpretation, the cost of measures required for repairs to make further operations on the site possible after the construction work has been impaired by material damage and the continuation or completion of the work has been held up is covered not under clearance of debris but under Section I, item 1 of the CAR policy. Repair work is considered as a repetition of construction work that has already been performed.

    This is illustrated by the following example:

    Excavating the foundations of a new building is part of insured construc­tion operations. The cost of this is part of the sum insured. If this part of the construction work is then damaged or destroyed in an event of an accid­ental nature, such as silting-up following rainfall, then the construction work is damaged and must be repaired. The cost of restoring the excava­tions to the state before the silting-up is indemnifiable as material damage, since a necessary repetition of already performed work constitutes repair work.

    To summarize, if an insured object is affected negatively by an external influence of an accidental nature, all the repair work that is necessary to restore the object to the original condition is indemnifiable as material damage, meaning that the conditions and circumstances must be the same as before the damage occurred. The cost of cleaning an insured object and the cost of removing unusable, destroyed parts (a purely finan­cial loss!) after an event of an accidental nature is only then reimbursed if a separate limit of liability has been agreed on.

     

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2 Comments on “Debris of Removal / Clearance of Debris (CAR Munich RE)”

  • Dong wrote on 23 February, 2018, 11:06

    Dear Sir,

    I have two questions regarding this clause. Pls advise:

    Construction of the canal is a part of insured items. Construction works include soil excavating, concreting canal bed and talus slope. Construction works have been done but they have not yet handled over to the Principal.
    Flood occurred and foreign soil/rubbish filled up the canal and destroyed some talus slope of canal.
    There are two opinions as below:
    1) Removal of foreign soil/rubbish is referred to removal of debris clause: because constructions works (mean concreting work the canal bed and talus slope) have been done. The Canal needs to be cleaning work only.
    2) If constructions works (mean concreting work the canal bed and talus slope) have NOT been done: the cost of Removal of foreign soil/rubbish is indemnifiable as material damage since a necessary repetition of already performed work constitutes repair work.

    Thank you in advance.
    Best regards,
    Dong

    YES
    You do need re-construction of the canal = damage to CONTRACT WORK and
    cost of removal of DEBRIS. So the claim would be significantly high for “removal of debris” you need to clean them up before starting re-construction.
    I believe you have adequately insure the CONTRACT WORK. Please assure you adequately insure the Cost of removal of debris. because RoD would equal to your CONTRACT WORK value

  • Hussain wrote on 17 June, 2022, 22:04

    is Dismantling of PreFeb Roof which got damaged due to a Fire on a huge area of 390000 Sft falls under debris removal or wreckage after dismantling will fall under debris removal? Please suggest.

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