Everyone strives to deliver quality projects safely, on time and within budget.
The reality is few building owners and general contractors remain untouched by the impact of construction defect claims.
In a recent study by Dodge Data and Analytics, construction defects was the most common type of dispute filed.
This can happen on projects of all sizes and types. Sometimes, they result as failure to design or construct something within reasonable terms of the owner's expectations.
This type of claim can have a high toll on the companies involved, leading to higher costs and disruption in their income/services. This type of claim can also be the costly to the business.
“Construction defect claims can affect a contractor’s reputation, its profits, and its ability to maintain insurance coverage,” says Aldo Fucentese, VP and Underwriting Manager for Liberty Mutual Insurance’s Construction practice. “One large claim can cripple a business if it doesn’t have the right risk management plan in place.”
However, here at All Access Insurance, we have a plan to help our construction companies combat this type of claim.
1. Ensure you know what your coverage/protection is.
Often there are multiple people involved when it comes to a construction related project. You have stakeholders, general contractors, designers, engineers, subcontractor and suppliers.
Ensuring you have clear guidelines and expectations and a set timeline will be of utmost importance.
Review your general liability policy to review limits, exclusions, and exceptions. Some policies allow coverage for faulty workmanship if completed by subcontractors.
2. Put a tight quality control program in place.
Clarify legal and financial responsibilities within the written contract. Make sure that stakeholders are also contractually responsible for their own work. How? Review each of the parties Certificate of Insurance and additional Ensured Endorsements for adequate coverage levels.
Collaborate closely with all parties involved and communicate clearly what the expectation is on time, workmanship and results. This will help everyone set expectations, clarify expectations and set goals.
Make sure you do pre-site inspections, quality and safety inspections.
3. Ensure you keep great documentation.
Setting up an environment where excellence is expected will make everyone do better work. Take pictures of pre-work, work and post-work so that you know where defects or problems have occurred.
I highly recommend you keep a tight paper trail of change orders, schedules, contact informations, installation verifications, material delivery receipts and any/all documentation possible.
If there is a claim, call our office immediately and be ready to provide the needed documentation on your part.
If you are found at error, be open to settlements being part of the solution to get your business back in project mode. No one is perfect but ensuring or minimizing the possibility of a claim is just smart business.
Keeping you protected.
All Access Insurance in Littleton, CO, who represents multiple insurance companies as a “Broker” and provides products for auto, home, commercial, workers compensation, and much more! Call us today for a free quote at (303) 932-1700.