In the case of Jefferson County Schools v. Tennessee Risk Management Trust, et al., No. E2017-01346-COA-R3-CV (decided March 15, 2018) (Jefferson County Schools v. TN Risk Management), the Tennessee Court of Appeals addressed the question of whether a Fire Marshal’s directive qualified as an “ordinance or law” for purposes of insurance coverage. Following a major rainstorm, a building at the Jefferson County High School collapsed. A policy issued by Travelers Indemnity Company contained an “ordinance or law” provision providing coverage for expenses “caused by the enforcement of any ordinance or law.” The Tennessee State Fire Marshal’s office issued a directive requiring the involvement of a structural engineer, with which the insured complied. That engineer determined compliance with the Fire Marshal’s directive required vertical reinforcement of the remainder of the damaged building. Travelers’ engineer opined that the additional reinforcement on the remainder of the building was not necessary, and Travelers declined to pay for the additional work. The insurer argued the Fire Marshal’s directive, which did not contain specific citation to Code violations, failed to constitute an “ordinance of law” for purposes of coverage under the policy. Because the Court of Appeals found it was the Fire Marshal’s authority under Tennessee law to issue the directive it did, such directive triggered the “ordinance or law” provisions of the insurance policy. The court commented the Fire Marshal’s “directive carried the force of law and Plaintiff had to obey it if it wished to re-occupy” the building.

The Court did acknowledge the insurers’ concerns “regarding the limits to their responsibility under the policy,” which it described as “not open-ended.” However, based upon the facts of the case, and the testimony given, this Court held the directive of the Fire Marshal triggered the “ordinance or law” coverage. In evaluating claims under similar provisions, therefore, it does appear it will be necessary to evaluate the extent to which the Fire Marshal or other governmental authority had the actual authority to issue any particular Order under consideration.