Insurance Coverage For Construction Defect Claims: Legal Guidance For Builders And Contractors
Operating a successful construction business, whether as a builder, developer or design professional, requires you to manage immense risk. Even so, a construction defect lawsuit can still arise, and you need to rely on your insurance coverage.
At McLeod Law Group, our San Diego firm is dedicated to helping policyholders secure full and accurate recovery from their insurance carriers. Our founder, John McLeod, is widely recognized. He regularly represents builders, designers, architects and developers involved in high-value real estate projects. We understand the high-stakes and complex liability issues inherent in this industry.
Key Insurance Policies Covering Construction Defects In California
Depending on the claim, builders, developers and design professionals rely on different construction insurance policies to defend against and cover construction defect claims in California. These include:
- Commercial general liability (CGL) policies: This policy provides coverage for property damage and bodily injury caused by an incident.
- Professional liability insurance: Professional liability insurance, also known as errors & omissions (E&O) coverage, protects design professionals against claims arising from negligence in their professional services, such as design deficiencies.
- Builders’ risk policies: A builders’ risk policy covers physical damage to the property itself from specific perils like fire or weather.
Securing recovery from these policies for San Diego defect claims requires a clear understanding of California’s unique insurance laws.
What Are The Different Types Of Construction Claims That Can Be Covered By Insurance?
For developers and contractors dealing with multimillion-dollar projects, construction claims can take many forms. Some of the primary types of claims where construction defect insurance may be triggered include:
- Property damage to nondefective work: If allegedly defective work causes damage to other, nondefective parts of the project or adjacent property, your CGL policy often provides defense and indemnity coverage.
- Bodily injury claims: CGL policies are designed to cover claims where a construction defect, such as a code violation or unsafe condition, causes injury.
- Damage to completed operations: Products-completed operations hazard coverage covers damage that occurs after the project is finished and the owner takes possession.
- Subcontractor work: Many policies are interpreted in California to cover damage caused by a subcontractor’s faulty work. This is a frequently litigated area, but it provides a critical layer of protection for general contractors and developers.
Understanding the specific wording of your CGL policy is the first step toward securing coverage. Our lawyer will meticulously examine your policy language to determine all avenues for coverage.
Are There Construction Defects That Are Not Covered By Insurance?
Insurers do not intend for a CGL policy to act as a quality control guarantee or a bond.
Therefore, there are major types of construction defects and related losses that standard insurance policies typically exclude. Common exclusions include:
- Damage to your own work: Policies generally exclude coverage for repairing or replacing the defective work itself. For example, the cost to fix an incorrect installation is generally not covered. However, if the incorrect installation caused water damage, the water damage might be covered.
- Contractual liability: Most policies exclude coverage for liability assumed under a contract, though laws may allow for exceptions.
- Intentional acts or willful misconduct: Insurance policies will not cover damage or injury caused by intentional wrongdoing.
We provide legal guidance to interpret these complex exclusions. We will fight back if an insurer argues an overly broad application of an exception. Our job is to advocate for coverage where the insurer says none exists.
What If An Insurer Refuses To Pay A Construction Defect Claim?
Sometimes, insurance companies deny claims to protect their own finances. When an insurer issues a denial, you have the right to challenge that decision to seek recovery of your construction insurance. This process often involves sending a comprehensive demand letter, filing a lawsuit for breach of contract or pursuing a bad faith action if the denial was unreasonable.
Attorney McLeod has over 30 years of experience litigating against major insurers. In that time, he has successfully recovered billions of dollars for organizations. He can help you secure the defense and indemnity coverage our construction clients need to survive litigation. The complexity of construction defect insurance demands assertive legal representation. Our San Diego construction insurance attorney is ready to step in.
Talk To A San Diego Construction Defect Insurance Claim Attorney
Protecting the financial security of your construction company or high-value real estate project is paramount. Do not rely on your insurance company to fairly resolve a significant construction defect claim on its own.
Our construction defect insurance attorney can evaluate your current construction insurance coverage and explain your options.
We offer initial consultations to provide guidance on defective claims. To schedule an appointment, contact us at 619-433-6682. You can also send a message through our firm’s website.