Construction Defect Claims

Construction Defect is a phrase contractors do not like to hear.

Construction defect claims can be defined as damages resulting from faulty work or workmanship. Court decisions and state regulations make managing the risk of construction defects more than just prevention.

Construction Defect Insurance

The CGL policy underwent a major revision in 1986. The changes sought to clarify and simplify the “property damage” exclusions. The changes were not, however, intended to change the meaning or effect of the exclusion.  Not every policy is created equal.  Make sure your contractor’s insurance does not have defect exclusions.

“Now, an ‘occurrence’ is typically defined under a CGL as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” In other words, a threshold coverage question is whether the Homeowners’ lawsuit alleges property damage caused by an occurrence.”Property Casualty360.com

Legal battles will continue over whether commercial general liability policies cover construction defect claims. This will cause increases in the cost of contractors’ insurance.

Construction Defect Risk Management

• Call us for a coverage review.
• Limit sub-contractors, if possible.
• Require sub-contractors to have the same coverage as you do.
• Document all conversations and changes.
• Repair any problems when you see them.

Construction companies should make sure they protect themselves by identifying the applicable states laws, reviewing all the risks, identifying any insurance gaps under state laws, and then taking steps to resolve any coverage issues.

This entry was posted on Sunday, March 12th, 2023 at 5:04 pm and is filed under Business Insurance, Professional Liability. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.