Construction Defect Insurance

What is construction defect insurance?

Construction defect insurance is specialized liability coverage designed to protect contractors, builders, and other construction professionals from claims arising from defects in their work or the materials used.

One example of a situation that may necessitate construction defect insurance is when a contractor builds a residential property, and the homeowner later discovers water damage caused by faulty plumbing installation. In this case, the construction defect insurance could cover the costs of repairs and potential legal claims against the contractor.

Need help with a matter related to construction defect insurance? Schedule your consultation today with a top insurance attorney.

In Florida, which laws and regulations relate to construction defect insurance?

Florida has specific laws and regulations pertaining to construction defect insurance and construction defect claims. One of the most essential statutes is the Florida Construction Defect Statute (Chapter 558, Florida Statutes), which outlines the process for resolving construction defect disputes, including the requirement for written notice, the opportunity to cure, and other pre-litigation procedures.

In addition, Florida’s building codes and regulations play a role in construction defect insurance, as they establish the minimum standards for construction work. Failure to comply with these standards could lead to construction defects and subsequent insurance claims.

In conclusion, construction defect insurance is crucial for professionals in the construction industry in Florida, as it protects against potential claims and lawsuits related to defects in work or materials. Familiarity with the relevant laws and regulations, such as the Florida Construction Defect Statute, is essential to ensure compliance and minimize the risk of construction defect claims.

What are common disputes regarding construction defect insurance that lead to litigation?

The following disputes are among the most common in actions regarding construction defect insurance in insurance procurement and coverage matters:

• Scope of Coverage: Disputes may arise when the policyholder and insurance carrier disagree on whether a specific defect is covered under the policy. This could involve interpretations of policy language and exclusions.
• Faulty Workmanship: Litigation may occur if the insurance carrier argues that the policyholder’s negligent workmanship led to the defect; thus, the damage is not covered.
• Timeliness of Claims: Disputes may arise if the policyholder files a claim after the applicable statute of limitations or the policy’s reporting deadline.
• Policy limits: If the cost of repairing the defect exceeds the policy’s limits, disputes may arise over the allocation of the available funds.
• Indemnity and Defense Obligations: Conflicts may occur if the insurance carrier contests its duty to indemnify and defend the policyholder in a construction defect lawsuit.

We are value-based attorneys at Jimerson Birr, which means we look at each action with our clients from the point of view of costs and benefits while reducing liability. Then, based on our client’s objectives, we chart a path to seek appropriate remedies.

To determine whether your unique situation may necessitate litigation, please contact our office to set up your initial consultation.

What measures should an insurance carrier take to minimize the risk of litigation over construction defect insurance? 

To successfully mitigate the risk of litigation over construction defect insurance in insurance procurement and coverage matters, insurance carriers should follow these steps:

• Clear Policy Language: Use clear, unambiguous language in policy documents, ensuring policyholders easily understand coverage terms, exclusions, and conditions.
• Educate Policyholders: Provide education and training to policyholders on coverage details, claim filing procedures, and reporting deadlines to minimize misunderstandings and potential disputes.
• Regular Communication: Maintain open and ongoing communication with policyholders to address any concerns or questions regarding their coverage and keep them informed of any policy changes or updates.
• Proactive Claims Management: Promptly investigate and resolve claims, keeping policyholders informed of the progress and working collaboratively to find a satisfactory resolution.
• Risk Management Assistance: Offer risk management services and resources to help policyholders identify potential construction defects early on and implement preventative measures to reduce the likelihood of claims.
• Mediation and Alternative Dispute Resolution: Encourage using mediation and alternative dispute resolution methods to resolve conflicts before they escalate to litigation, saving time and resources for both parties.

By following these steps, insurance carriers can help minimize disputes and the risk of litigation over construction defect insurance, fostering positive relationships with their policyholders and promoting a better understanding of policy coverage and obligations.

What must be proven to successfully file a lawsuit regarding construction defect insurance, and what are common legal defenses to those claims? 

Procedurally, a plaintiff must comply with the notice provisions and deadlines set forth in the insurance policy and any applicable Florida and federal statutes and regulations. This includes timely filing of the lawsuit and ensuring proper service to the defendant’s insurance company.

In a breach of contract lawsuit based on an insurance policy, the plaintiff must typically prove the following elements:

• Existence of a valid insurance policy covering the plaintiff’s loss;
• Covered loss or damage occurred during the policy period;
• Compliance with policy conditions, such as providing timely notice and proof of loss; and
• The insurer failed to pay the claim or undervalued the claim in violation of the policy terms.

Common legal defenses include:

• Policy Exclusions: The insurer argues that the loss or damage is excluded from coverage under the policy terms.
• Late Notice: The insurer claims that the policyholder failed to provide timely notice of the loss, as the policy requires.
• Misrepresentation or Concealment: The insurer alleges that the policyholder misrepresented or concealed material facts when obtaining the policy or submitting the claim.

To see what actions or defenses may be available for your unique situation, please contact our office to set up your initial consultation.

Frequently Asked Questions

How can I determine if my construction project requires construction defect insurance in Florida?

Determining whether your construction project requires construction defect insurance would typically involve consulting with an experienced insurance professional or attorney who can assess your specific situation and advise you accordingly.

What steps should I take if I suspect a construction defect has occurred on my property in Florida?

If you suspect a construction defect has occurred on your property in Florida, it is essential to consult with an experienced construction defect attorney or an insurance expert who can guide you through filing a claim and seeking appropriate compensation.

Have more questions about a construction defect insurance-related situation?

Crucially, this overview of construction defect insurance does not begin to cover all the laws implicated by this issue or the factors that may compel the application of such laws. Every case is unique, and the laws can produce different outcomes depending on the individual circumstances.

Jimerson Birr attorneys guide our clients to help make informed decisions while ensuring their rights are respected and protected. Our lawyers are highly trained and experienced in the nuances of the law, so they can accurately interpret statutes and case law and holistically prepare individuals or companies for their legal endeavors. Through this intense personal investment and advocacy, our lawyers will help resolve the issue’s complicated legal problems efficiently and effectively.

Having a Jimerson Birr attorney on your side means securing a team of seasoned, multi-dimensional, cross-functional legal professionals. Whether it is a transaction, an operational issue, a regulatory challenge, or a contested legal predicament that may require court intervention, we remain a tireless advocate every step of the way. Being a value-added law firm means putting the client at the forefront of everything we do. We use our experience to help our clients navigate even the most complex problems and come out the other side triumphant.

If you want to understand your case, the merits of your claim or defense, potential monetary awards, or the amount of exposure you face, you should speak with a qualified Jimerson Birr lawyer. Our experienced team of attorneys is here to help. Call Jimerson Birr at (904) 389-0050 or use the contact form to schedule a consultation.

Here are some blogs written by JB attorneys that provide more information about construction defect insurance:

• Construction Defects: What Insurance Policy Applies | Jimerson Birr (jimersonfirm.com)
• Construction Defects and Insurance Coverage: When is the Duty to Defend Triggered? | Jimerson Birr (jimersonfirm.com)
• Does an Insurer Have a Duty to Defend a Claim Immediately Upon Receipt of a Florida Chapter 558 Construction Defect Notice? (jimersonfirm.com)
• Benchwarmer Effect: The Sobering Reality of Coblentz Agreements (jimersonfirm.com)