Debris Removal Insurance: Meaning, History, Examples

What Is Debris Removal Insurance?

Debris removal insurance is a section of a property insurance policy that provides reimbursement for cleanup costs associated with damage to property.

Policies with a debris removal provision typically only cover debris resulting from an insured peril, such as charred wood or twisted metal from a building fire.

How Debris Removal Insurance Works

Debris removal insurance policies commonly have a cap on the amount of reimbursement that a policyholder can receive for debris removal costs. While policies typically have debris removal as a standard provision, the policyholder can often purchase additional coverage. The policy provision may also extend to the removal of hazardous materials that may cover the property but could exclude pollutants.

When calculating the many costs involved with repairing and replacing property after destruction or damage, the costs of removing the debris and cleanup are in addition to—rather than a part of—the value of the damaged property. As such, the impact on the total amount of the loss and the coverage limitations on these costs in most standard homeowners insurance policies are frequently overlooked when arranging the coverage initially.

Insurance companies may offer debris removal coverage as additional coverage rather than a part of a basic property policy. Coverage limitations might be capped as a percentage of the insurer’s liability, such as 25%, for a covered event. The policy deductible must be paid out of pocket by the homeowner unless stated otherwise in policy declarations.

Insurers may impose a time limit for reporting claims for debris removal, such as within 180 days after the date of loss. The expenses likely only need be reported, not incurred, within that time. A contractor’s estimate should satisfy this requirement, and it is important to get the full amount in writing to present to the insurer.

History of Debris Removal Insurance

Under the 1943 New York Standard Fire Policy and its predecessors, debris removal costs weren't mentioned as either covered or excluded. This omission gave rise to controversy, with some insurers routinely including these costs as a part of the claim settlement and others rejecting or resisting payment, contending the cost was not a direct result of the loss and, as such, not covered.

To clarify coverages, a debris removal clause was added to the forms attached to the standard fire policy. It stated that the coverage extended should include the cost of removal of the debris resulting from the property loss.

The debris removal coverage was within and did not increase the limit of liability. Debris removal costs were not considered when determining compliance with the coinsurance clause of the policy. However, if a coinsurance penalty was found to apply, reducing the recovery of the property loss, customary adjustment practice was to use the same limitation to the payment for debris removal.

Frequently Asked Questions (FAQs)

The Bottom Line

Homeowners insurance policies may offer basic coverage for debris removal, but some policies may exclude it. Instead, some homeowners may need to buy additional coverage for debris removal. Insurers may limit the coverage amount for claims and mandate claims to be reported within a specified time frame, such as 180 days, and include a contractor's estimate.