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 significant revision in recent years. 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 construction defect claims are covered by commercial general liability policies. 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 subcontractors to have the same coverage as you do.
- Document all conversations and changes.
- Repair any problems when you see them.