Insurance providers say they won’t cover swimming pool damages caused by concrete cancer — a defect also known as the alkali-silica reaction. Whether they must pay for this disastrous, destructive flaw is being decided in courts today.

Two lawsuits concerning the alkali- silica reaction (ASR) involving Texas pool builder Cody Pools and its insurers are being adjudicated in federal court.

Both Amerisure Insurance Company and The Continental Insurance Company (joined in its suit with the National Fire Insurance Company of Hartford) have filed separate actions in the U.S. District Court for the Western District of Texas, seeking judgments to determine their coverage obligations related to ASR damages in pools built by Cody Pools.

The issue centers around a specific type of concrete defect that has been implicated in thousands of defective pools and other structures across the country. In recent years, it has become a major problem in Central Texas. ASR occurs when alkaline cement reacts with silica in aggregates, causing expansion, cracking, and structural deterioration over time. According to experts, concrete cancer occurs when fly ash — a supplementary cementitious material (pozzolan) used in concrete to improve its durability — is lacking in the concrete mix.

Paulo Benedetti, a renowned pool and spa builder and design authority, says that concrete cancer started becoming prevalent in Central Texas in recent years.

“Due to a sudden unavailability of fly ash and other pozzolans, which are used to prevent the reaction, concrete suppliers simply eliminated them from their mix designs,” Benedetti explained in WaterShapes, October 31, 2022. “Fast forward two years. Suddenly, finished projects started experiencing a myriad of maladies. Plaster started to mysteriously delaminate; shrink cracks exploded in size and reflected through plaster; stone veneers fell off of raised bond beams; steps and benches began to develop cracking.”

Now, these not-so-mysterious maladies have come to the fore: In Central Texas, pools built between 2017 and 2023 were susceptible to concrete cancer because a sudden unavailability of fly ash led to its removal from concrete mix designs.

Initially, Benedetti says, Texas pool builders had no idea what was happening. They had been purchasing their concrete mixes (with fly ash) from concrete suppliers, and suddenly — and without warning — a crucial ingredient had been removed from the mix. Though the load tags for the concrete mix now showed “zero” for added fly ash, according to Benedetti, “no one gave it any thought.”

Ultimately, Benedetti says, the moral responsibility for this dilemma belongs to the aggregate and concrete suppliers.

But it is the pool builders, their customers, and the insurance companies who are duking it out in court today.

In the lawsuits filed in federal court, Amerisure Insurance Company and The Continental Insurance Company are seeking to deny coverage for damages related to ASR in pools built by Cody Pools. The insurers argue that their policies do not cover this type of long-term deterioration, while Cody Pools asserts that the damages should be covered under their general liability policies.

The outcome of these lawsuits could set a precedent for future ASR-related insurance disputes in the pool construction industry and beyond.

Cody Pools (as well as a lot of other Texas pool builders) is currently facing numerous lawsuits from homeowners with newly built and utterly faulty pools. The homeowners are facing ASR-related pool defects and are seeking damages and other remedies from Cody.

The fact that these pools have ASR is undisputed: Petrographic analysis confirmed that “ASR was present, that cracking in the pool was due to ASR, and that damage was likely to continue if moisture and temperature conditions remained the same,” court papers state.

“The question is, who should pay?

ChrisFulbrightofCedarPark,Texas, is one of Cody Pools customers. Fulbright paid more than $100,000 for a new pool in 2020. That pool has concrete cancer, and it is not usable. Last May, Fulbright brought a lawsuit against Cody pools over the pool’s warranty, which according to the lawsuit, “guarantees customers the delivery of a structurally sound pool.”

“I paid for a pool in 2020,” Fulbright said. “It's supposed to have a lifetime warranty. I'd like a working pool.”

Fulbright is among those waiting to see if and how he might be made whole again. And he is not alone.

According to court filings, Vaseem and Asra Syed are also currently holding Cody Pools liable for pool defects caused by ASR.

In both of those currently open cases, Cody Pools notified Continental Insurance Company to indemnify it against those claims and suits.

Cody Pools has also now settled some (at least three) other ASR claims filed by homeowners, and the company has demanded that Continental Insurance Company pay for those settlements.

Cody Pools is also facing ASR-related claims from six additional Austin-area homeowners for faulty pools built between 2019 and 2022, with price tags ranging from about $160,000 to more than $300,000 each.

Due to the inability to fix these defective pools, each of the homeowners seek to rip out and replace the pools at Cody’s expense.

For these six claims, Cody pools turned for payment to Amerisure, which covered Cody Pools when the six pools were built.

Both the Continental Insurance Company and Amerisure have now brought suits against Cody Pools, seeking declaratory judgments that neither insurance company has an obligation to pay out the numerous claims that Cody Pools is facing.

Both insurance companies make the same basic argument: The policies they issued to Cody Pools contain a “silica exclusion,” and they therefore have no duty to cover the claims against Cody Pools.

The Continental policy states: “This insurance does not apply to: Property damage arising in whole or in part out of the actual, alleged or threatened presence of silica…” In its lawsuit against Cody Pools, Continental asks the court to decide if it should cover the damage stating “it has no obligation to defend or indemnify Cody Pools.”

The Amerisure policy has similar language: “This insurance does not apply to: Silica or silica-related dust . . . Property damage arising, in whole or in part, out of the …. presence of silica or silica-related dust (OR) Any loss, cost or expense arising, in whole or in part, out of the … effects of silica or silica related dust…” In its counterclaim, Cody Pools states that it has an agreed protocol with both Amerisure and Continental insurance for the efficient resolution and payment of homeowner claims. Part of that protocol involves a visual inspection of the pools followed by coring and testing to confirm the presence of alkali-silica reaction (“ASR”) in the pools.

In its counter claim, Cody pools stated that, “CNA and Amerisure assured Cody Pools that the purpose of the protocol was to quickly resolve the homeowners’ claims, and in doing so, prevent the homeowners from filing lawsuits or arbitration demands that, if filed, would be defended by CNA and Amerisure pursuant to the insurance policies. The very information that CNA had assured Cody Pools was necessary to defend and promptly resolve customer claims would instead be used as the basis to deny coverage.”

Joshua Wilson, Cody customer Fulbright's attorney, is not surprised by the tactics that Amerisure and Continental are using to deny coverage.

“Insurance companies, especially commercial general liability carriers, try to do what they can to not pay claims,” Wilson said.

With numerous other concrete cancer cases on his desk, Wilson says that the current insurance lawsuits will prolong resolutions for thousands of similarly situated homeowners.

“It's going to slow down coverage, obviously, for the pool builder,” Wilson said. And if the builder doesn't have the funds to remediate the damage because it is waiting for an insurance settlement, it will also delay any resolution for the pool owner, he added.

Cody Pools is just one Central Texas pool builder that is on the hook to pay possibly millions for concrete cancer.

In the meantime, both homeowners and pool building companies are waiting for the dust to settle on the court’s decision.