While construction is in progress (prior to the closing of the sale):
After construction completed:
Current coverage for construction defect dependent on policy form
This page is a listing of actual lawsuits that we’ve received in our office over the past ten years. These examples are just the tip of the iceberg. Many of the lawsuits that we’ve seen filed against our builder clients were legitimate but many others have been frivolous or asked for outrageous damage amounts that were way out of proportion with reality. A recent lawsuit filed against one of our builder clients who performed a relatively simple $60,000 fire restoration job asked for $6,000,000 in damages. Thankfully, the court dismissed the lawsuit but the legal defense fees were in the $100,000 range.
Also, some of the examples represent construction defect lawsuits. These lawsuits used to be covered, in many cases in their entirety, by the General Liability policy. However, due to the carriers taking heavy losses as a result of the construction defect crisis, most of the carriers started to either partially or totally exclude these types of claims from coverage. Some of the carriers are now offering coverage buybacks for an additional premium charge.