Building Owners Lose Insurance Coverage Over Lapsed Elevator Inspections They Cannot Schedule

Many commercial property insurance policies require current elevator inspection certificates as a condition of coverage. When a state inspection backlog causes an elevator's certificate to lapse — not because of any failing on the building owner's part, but because the state simply has not sent an inspector — the building owner faces a paradox: they cannot obtain the inspection certificate their insurer requires, but they also cannot shut down the elevator without violating their lease obligations to tenants. The result is that buildings operate with lapsed certificates, exposed to both regulatory penalties and potential denial of insurance claims. This matters because the financial exposure is enormous. A single elevator injury claim can reach $1 million or more. If the insurer can point to a lapsed inspection certificate as grounds for claim denial, the building owner bears that cost entirely. For small and mid-size building owners — the owner of a four-story office building or a six-unit apartment building with one elevator — a denied claim of this magnitude is potentially bankrupting. The problem compounds because insurance companies are increasingly aware of the inspection backlog issue and are responding by raising premiums, adding exclusions, or requiring building owners to arrange (and pay for) private third-party inspections in addition to the state inspection. This creates a two-tier system where well-resourced building owners can buy their way to compliance, while smaller owners cannot absorb the additional cost and simply operate at risk. This persists because the state inspection programs that create the backlog have no liability for the downstream consequences. Massachusetts, for example, has a statutory obligation to inspect elevators annually, but when it fails to do so, building owners bear all the consequences — regulatory, insurance, and legal — while the state faces none. There is no mechanism for a building owner to compel the state to perform an inspection on schedule, and no safe harbor provision that protects building owners who have requested an inspection but not received one. Structurally, this is a market failure caused by a government monopoly on inspection services (in states that do not allow third-party inspectors) combined with chronic underfunding of the inspection workforce. The building owner is a captive customer of the state inspection program, with no alternative supplier and no contractual recourse when the service is not delivered. The insurance industry has adapted to this reality by shifting risk to building owners, but the underlying inspection capacity problem remains unaddressed.