There is much that can go wrong in any large construction project: improper installations, defective products, errors and omissions made by designers, unexpected site conditions—the list is long. Insurance coverage or a performance bond often means the difference between compensating injured parties and a nightmare of litigation and financial distress. Unfortunately, insurance carriers often choose to wait while parties take their disputes through lengthy, expensive litigation, often adding yet more delays to the project. Getting insurers to the table before litigation would save all parties significant time and money. This article is a case study in one method of bringing insurers into settlement discussions early on through cooperative nonbinding arbitration among the parties, followed by mediation with the insurance carriers.
The main problem for parties seeking insurance coverage in complicated construction defect cases is that there are too many variables. There is often a tangle of liability issues, as well as confusion over which party the insurer is obligated to pay. Further complicating matters, defective construction claims may involve (1) builder’s risk insurance (first-party coverage), (2) liability insurance (third-party coverage) and (3) a performance bond and the responsibility of the surety behind the performance bond. Sorting this out can cause significant delays, particularly if a carrier takes the position that it does not owe coverage or that it is reserving its rights and refuses to come to the table for settlement discussions until after the other parties have fully litigated liability.
Originally published in Law.com on June 6, 2014.
Please see full article below for more information.
Firefox recommends the PDF Plugin for Mac OS X for viewing PDF documents in your browser.
We can also show you Legal Updates using the Google Viewer; however, you will need to be logged into Google Docs to view them.
Please choose one of the above to proceed!
LOADING PDF: If there are any problems, click here to download the file.
Topics: Builder's Risk Exclusion, Construction Defects, Construction Disputes, Construction Workers, Contractors, Liability Insurance, Mediation, Popular
Published In: Alternative Dispute Resolution (ADR) Updates, General Business Updates, Construction Updates, Insurance Updates, Residential Real Estate Updates
DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
© JAMS, The Resolution Experts | Attorney Advertising