Construction Insurance and Real Estate
Timely articles covering the most pressing issues facing construction firms in the Midwest

Insurance Issues and Other Sources of Liability
By David Seitter

There are many different sources of liability in the construction industry, thus it is essential that contractors and construction managers work together with insurers to ensure the right type of coverage from the start to end of any project.

Construction Defects
One of the more common issues that cause concern for construction managers is construction defect claims. These claims have continued to rise in recent years, and as this has occurred liability issues have continued to become complex and confusing.

There are several things you should consider when considering insurance for construction defects claims, including:

§ What situations is the insurer obligated to defend you?
§ Are there exclusions that will prevent defense?
§ Will a construction defect claim fall under your general liability coverage?
§ How can you limit your liability?
§ What can you do to limit the liability of your clients?
§ Is there an area that you might need more insurance coverage for?

Keep in mind when considering each of these things that many contractors’ commercial general liability coverage is in a state of flux. This is due in part to rising premiums. General liability coverage for commercial contractors is one of the highest insurance costs for construction agents, and typically includes many exclusions for certain project types.

Among the more common exclusions for general liability coverage include condominiums, apartments and other master planned developments.

There has been a trend in recent years for more construction defects lawsuits, which has led to the increased exclusions as well as increasing costs. Construction defects covers a broad range of topics including damage that occurs to a property after construction.

The best thing you can to do protect yourself is to go over any insurance policy with a fine tooth comb to be sure that it will meet your needs in any circumstance. It is also important that you review your insurance coverage on an annual basis and keep abreast of any changes in the law that might impact your coverage at any point in time.