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Definition: Debris Removal Insurance
Debris removal insurance provides coverage for the cost of removal of debris of a property caused by an insured peril such as flood or fire. A standard commercial property insurance covers only the damages to the property caused by the peril and may not provide coverage for clean-up. So the policy holder can go for an additional coverage for debris removal.
Tiles insulated with asbestos or chemicals stored in the house can become hazardous waste due to the impact of heat from the fire and improper disposal of such wastes would cause environmental problem. So with the additional coverage, the insurer promises to pay the expenses needed to remove the debris of the insured property resulting from an insured peril.
The maximum debris removal expense that can be covered under a standard property insurance policy would be 25% of the amount paid for property loss plus 25% of the deductible.
For e.g. If Property loss = $50,000 and Deductible = $1000
Then Debris removal expense = 25% of $51,000 = $12,750
In case the property loss and debris removal expense exceeds applicable limit of property insurance, an additional $10,000 would be available to remove the debris, depending on the limits of insurance.
Replacement cost of building
Property Insurance purchased
Debris removal cost
Since the whole of insurance amount is used for the replacement of the building and nothing is left to cover the debris removal cost, an additional coverage provision would provide $10,000 of coverage leaving $5,000 uninsured.