Practical tips for defending construction defect claims

Construction defect claims seldom offer obvious evidence of liability. It is paramount to have an in-depth knowledge and understanding of all concepts to be investigated. However, before any analysis of the merits of the claim is performed by an adjuster, it is important to ensure that several key steps are taken. Gathering information on each of these checklist items will ensure that liability and defense costs associated with a construction defect claim are managed appropriately:

Information Gathering

Start with some basics, as information takes time to collect and the other side could want the construction defect claim to move quickly:

Any and all correspondences, contracts, subcontracts, invoices, plans, drawings, change orders and photographs from the beginning to the end of the project.
Identify all current and former employees who worked on the subject project, including identifying their scope of work.
Establish a main contact person for your insured, preferably one who knows the information you will need without needing to reference documents, call other people, etc.

Identify the scope of work for the insured

The correspondences, contracts, subcontracts, invoices, plans, drawings, change orders and photographs collected in the above checklist item will be the primary documents governing the applicable scope of work for the insured. However, once the documents are obtained, look beyond the plain language of the contracts to determine the specific physical areas within the project in which the insured worked to determine if this was beyond the scope of work or within the confines of the agreements between the parties.

Identify the scope of work for other parties involved

Often overlooked when a construction defect claim comes in is performing a detailed analysis of the scope of work for parties that are not the insured. However, understanding the scope of work of other parties involved in the project will enable you to determine who was acting within their proper scope and who was not. Doing so will help determine who may have additional liability or complete liability other than your insured, as well as who else should be at the table to share in defense costs for the claim.

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Defending construction defect claims

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