Every professional contractor knows that insurance is a vital component of any successful construction project. Every project, regardless of size, will pose a risk to the wellbeing of employees and possibly non-employees too, which is why most contractors are required to purchase general liability insurance. Typically, a secure policy will cover an array of claims including property damage, physical injury, defense costs, and personal and advertising injury.
This is great news for contractors since even the safest job sites have some potential risks. Of course, you can take proactive measures to mitigate these types of risks, but there’s always a small chance that an unexpected event will put one of your workers or a third-party in danger. Generally, your policy will make a payout when a claim is filed, but what happens when it doesn’t? In this two-part article, our Knoxville contractor lawyers will answer this important question.
Was the Claim Covered by Your Policy?
When a claim is filed against a contractor and the insurer doesn’t pay out as expected, the first question a contractor should ask is whether or not the claim is covered by their policy. As we mentioned above, general liability insurance covers a broad range of claims, but from time to time, a claim will slip through the cracks. Most general liability insurance policies cover:
- Bodily Injury: if a person is injured on your project site, you are legally liable to cover the medical costs related to the injury.
- Property Damage: during a project, if you damage another person or entity’s property, you are responsible.
- Reputational Injuries: if a contractor or one of their employees slanders a competitor, they could be liable for any financial losses incurred as a result of reputational injury.
- Data Loss: the uptick in the value of data means that contractors are responsible for the corruption, deletion, or loss of this unique and intangible property. This includes blueprints or design plans furnished by the owner or a third party.
- Completed Products Coverage: if the contractor produces a product that is defective and leads to damages, the resulting damage is covered but not the defect itself. Typically, this type of claim is the result of a design error or workmanship defects.
Insurance Nonpayment Affects Businesses and Individuals Alike
The National Association of Insurance Commissioners (NAIC) publishes a list of consumers’ most common complaints pertaining to their insurance providers. Some of the most common issues that policyholders take grievance with are the fact that insurers are often slow to distribute claim payouts and that their claims were denied. Unsatisfactory claim amounts are another common affront.
You can bolster your case by keeping detailed records of all insurance claims, understanding your insurance policy and rights, and being persistent in your attempts to obtain the payout you deserve. Remember, maintaining insurance helps you avoid liabilities.
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.