Even if you have done your best work, you still may be accused of construction defects. These defects can be costly and may be patent (noticeable immediately) or latent (discovered later). If you are responsible for a construction defect, you may need to consult your insurance company to discuss possible coverage to repair the defect. It is important to understand your coverage and what might trigger possible claims to your liability insurance policy.
If you are responsible for a construction defect, a Tallahassee construction defect lawyer with Cotney Construction Law can help. Before you file a claim for a construction defect or take responsibility for a defect, it is vital to contact an attorney as soon as possible. Legal counsel will help you understand if you are liable or if a subcontractor or material supplier should contribute to the repairs.
What is a CGL Policy?
To protect and safeguard yourself and shield from liability surfacing you should retain a standard commercial general liability (CGL) insurance. However, contractors are sometimes unaware of the fact that their CGL policy typically does not provide coverage for claims by unhappy owners for the reimbursement to fix or replace supposedly damaged work as in the case of many construction defects.
A CGL policy is typically written into a construction contract to protect any liability for claims that ensue from accidents caused by the insured. The CGL has an Insuring Agreement in the policy that states that the policy will cover any bodily injury and property damage caused by an “occurrence,” which is defined by the policy as “an accident.”
Are There Common CGL Policy Exclusions?
We know that it’s not a contractor’s intention to cause a construction defect, and to that extent defective work is also considered an accident; hence also a protected CGL policy occurrence. Nevertheless, both insurance companies and courts can often be in agreement that deconstruction damages that derive from flawed workmanship alone are not considered an accident.
In a contractor’s CGL policy, you may find “business risk exclusions,” meaning that the uncertainty of defective workmanship is a business risk that is dispensed by the contract between the contractor and client. The business risk exclusions block coverage for property damage to the insured’s own work or property during the construction project, among other things.
All contractors should be aware that though their CGL policies typically exclude coverage for damage to the insured’s own work, there is an exception for work that is done by subcontractors. This exception, the “subcontractor exception,” states that the “your work” exclusion does not exclude coverage for claims against a general contractor for defective work that was done on behalf of the contractor by a subcontractor. This exception can be very beneficial to a contractor that is facing an expensive claim for faulty work done by a subcontractor who might not have the ability to fix or pay for the defective work.
Filing a CGL Claim
Because the forms are so complex, sometimes claim forms are not filled out correctly. Even the smallest error can lead to your claim being denied. Something as small as mistaking a date could lead to trouble. If you get a notice of denial, read it closely and don’t assume it’s correct.
Even though there are many things that can go wrong while filing an insurance claim, you do have rights. A Tallahassee construction lawyer with knowledge of construction law will help you file a claim and understand your coverages and how to file a claim.
Coverage Triggers for CGL Claims of Defect
If you check your CGL policy, you are unlikely to find the term “trigger”. This term is often used in the legal field to indicate when and how coverage is actually activated. Usually, this occurrence (or cause) and effect (the damages) both must be readily apparent to trigger coverage. This is the case in patent defects, which property owners will immediately discover. When the damages show up later, also known as latent defects, there is more room for dispute and controversy in the eyes of the law and insurance. Contractors may be concerned that the defect was caused by the property owner while the owner may be confused on where to place blame.
A trigger of coverage must be analyzed during the claims process in order for insurance companies and the law to support coverage. Because some triggers are often hard to pinpoint on one party, especially if they are latent, there may be room to argue against filing a claim against your policy. Tallahassee construction attorneys will discuss whether your CGL policy is triggered due to a construction defect and what your liability may be.
How to Avoid Construction Defect Claims
The best way to avoid filing a claim against your CGL policy for construction defects is to include provisions in every contract for what you will and will not be responsible. It is important to have an attorney assist you with crafting every contract before a project is ever started. This will help property owners understand who is liable for defects — be it your construction company, a subcontractor, engineer, architect, or materials supplier. Furthermore, Tallahassee construction law firms can help you understand your rights if you are accused of a construction defect.
If you need legal advice, Tallahassee construction attorneys with Cotney Construction Law will provide sound legal advice to construction professionals at every level and can assist your firm with any construction need.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.