Coverage for "Rip and Tear" Costs: A Case Law Survey

I. Introduction

The pace and frequency of litigation over allegedly defective construction continues unabated, and by all indications keeps rising. Typically, coverage does not exist under standard form general liability policies for costs to repair defective work or a defective product itself. A frequent point of contention in construction defect litigation, however, is whether coverage exists for damages caused by the need to remove, or replace non-defective work to “get to” and repair defective work or products. These costs are generally referred to as “rip and tear” or “get to” damages, although there is no uniformity in the use of this terminology in the case law.

The financial consequences of errors in construction can be staggering. This is all the more so if the only means of repairing the defective work also requires the demolition of other, non-defective work. There may be no more extreme an example of this than the claim of MGM Resorts International that the as-yet completed Harmon Hotel located at the City Center development in Las Vegas must be razed and rebuilt due to alleged construction defects that make the structure vulnerable to collapse. If true (the claim is aggressively disputed), the potential loss is the estimated $279 million investment in the property. Whether insurance would be available to cover any of the claimed amounts under these circumstances is presumably as aggressively disputed, but the point is that “rip and tear” costs can be tremendous, and the question of coverage for such damages is an increasingly litigated issue.

This survey attempts to identify and briefly summarize the facts and holdings of cases in which courts were called upon to determine whether such “rip and tear” or “get to” damages are covered under general liability insurance policies.¹

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1. This survey does not attempt to identify cases decided in the context of other insurance lines, which may exist for the benefit of contractors such as builder’s risk insurance, permanent property insurance or professional liability insurance.