Wind Blows Tarp Off Building and Rain Enters – Claims Magazine

ISSUE:

A contractor hired to repair the roof of a mattress warehouse removed a portion of the roof and covered the opening with plastic sheeting. During two storms, the plastic sheeting was blown up and rain entered the building and caused extensive damage to mattresses inside. The policy provided that there was no coverage for loss to the interior of a building or the contents in the building caused by rain, unless the building first sustained actual damage to the roof or walls by the direct action of wind or hail. The insured argued that the plastic sheeting constituted a roof, and that because wind blew the plastic open, allowing rain to enter, there was coverage under the exception to the interior water damage limitation.

SOLUTION:

This rain damage might not be covered. Some courts have concluded that temporary roofing materials do not comprise a roof that can be damaged by the wind for purposes of the exception to the coverage limitation. However, note that a couple of courts have reached a different conclusion, finding that temporary tarps were "roofs" damaged by wind. Under this minority view, there would be coverage.

ANALYSIS:

Although the language set forth above is nonstandard, similar language is found in standard commercial forms such as the CP 10 30 04 02 (limitations section) and the HO 00 03 10 00 (exclusion from the windstorm peril). The most commonly cited purpose of an interior water damage limitation is to preclude coverage for damage caused when rain, snow, sleet, sand, or dust enters through an open window. This sense of purpose is also useful to policy interpretation in a situation involving a poorly maintained roof. The insured has an option to maintain the roof, just as the insured has an option to close all windows. With respect to a poorly maintained roof, as opposed to an open window, the roof has sustained damage, but it is not by a Covered Cause of Loss. With respect to a tarp or other temporary covering, analysis in terms of the purpose of the limitation is more difficult. If an existing building is in need of a new roof, the work must be done. If a new building is under construction, there will be a stage of construction in which the roof has not yet been added. Not surprisingly, courts considering temporary roofing situations have reached mixed results, depending on the specific facts and policy language.

The initial scenario of this article, involving plastic sheeting blown off during repair, is taken from Diep v. California Fair Plan Ass'n, 19 Cal. Rptr. 2d 591 (Cal. Ct. App. 1993). The court accepted the insurer's argument that the plastic sheeting could not be construed to be a "roof," and that the opening in the actual roof was caused not by wind, but by the workmen who removed a portion of it. The court discussed the fact that although the word "roof" has many different meanings, it is not ambiguous and is commonly understood to be a permanent part of the building or structure it covers.

The court further observed that the repair contract stated that a portion of the roof would have to be removed to complete the repairs. The contract also provided that if it rained, the contractor would put plastic sheeting on the open part of the roof. The court observed that "everyone connected to this project, including the insured, realized part of the roof was missing, and could not have considered the plastic sheeting constituted anything other than a nonstructural band-aid."

The Diep court relied on Camden Fire Ins. Ass'n v. New Buena Vista Hotel Co., 24 So.2d 848 (Miss. 1946), for the reasoning that the repairmen and not the wind opened the actual roof. In Camden, felt workmen physically struggled to hold down in a windstorm was not considered a "roof" within the exception to the limitation. The Diep court's holding was also in line with that of the court in New Hampshire Ins. Co. v. Carter, 359 So.2d 52 (Fla. App. 1978). In Carter, a Homeowner's insurer was not liable for loss to personal property caused by rain coming through tar paper covering wood decking after the shingles had been removed in preparation for the placement of new shingles on the insured's dwelling. The court stated it was questionable whether the tarpaper was a "roof" and that even if it were, any discontinuity of the roof was caused by the insureds and not by the wind. Further, although the policy contemplated repair of the property, the fact of repair could not vitiate the plain terms of the policy.

A case subsequent to Diep, which reached a similar result, was Charter Oak Fire Ins. Co. v. Carteret County Bd. of Comm'rs, 91 F.3d 129 (4th Cir. N.C. 1996). In Carteret, plywood and two layers of roofing felt had been attached to the trusses of a commercial building after all shingles had been removed and the renovation project was unexpectedly interrupted. The court relied on Diep, Camden and Carter for the proposition that, according to the ordinary meaning found in dictionaries, the plywood and felt was not a "roof" as the parties intended under the policy. Also, see Interior Shutters, Inc. v. Valiant Ins. Co., 2000 WL 1879129 (10th Cir. Okla. 2000) (unpublished opinion). The insured contracted to have its roof removed and replaced with a new one. While the roof was being removed, the open portions were kept covered with a heavy plastic material and tarpaper held down along the edges by new roofing materials. One night a storm loosened the plastic and damaged property inside the building. The court held that even though the cover was heavy and anchored by tarpaper and other materials, it was not a "roof" within the meaning of the commercial policy language.

Both the Diep and the Interior Shutters courts distinguished Homestead Fire Ins. Co. v. DeWitt, 245 P.2d 92 (Okla. 1952), where the policy was obtained specifically to cover the construction of an addition to a school. The Homestead court noted that the policy covered "materials, equipment, supplies and temporary structures of all kind, incident to the construction of said building." Under the circumstances, the Oklahoma Supreme Court held that "it was in the contemplation of the parties … to cover all risks incurred … in connection with the construction of the addition…. [T]he opening in the roof was necessarily made in order that the roofs of the two buildings might properly be tied together, and … this opening was covered by a temporary roof of canvas" through which came the damaging rain after wind blew aside the canvas.

The court in Victory Peach Group, Inc. v. Greater New York Mut. Ins. Co., 707 A.2d 1383 (N.J. App. 1998), declined to rely on Diep. It reached the same result as did the court in Homestead but on facts involving repair of leaking roof seams. Since the repairs were not completed by the end of the day, the insured nailed down three large tarps that were later ripped off by wind during a storm. The court held that the repairs themselves were covered property and that the proposition that the repairs to the roof made the roof something other than a roof was unacceptable.

Conclusion:

There seems to be a trend toward holding that a tarp is not a roof for purposes of the exception to an interior water damage limitation. It seemed for a while that this rule would apply except with respect to tarps on new construction. The holding in Victory Peach, however, clouded that distinction and suggested options for courts that may consider this issue in the future.