Insurance is an important component in any construction development project. Whether you’re building a house, hotel, or an office building, your project is likely to involve multiple subcontractors and a lot of construction materials. Homeowners insurance protects individual property owners from losses resulting from construction defects, natural disasters, and accidents. Likewise, contractors rely on liability insurance to cover the cost of defending construction defect claims. Knowing you’re protected can give you much-needed peace of mind during the building process. But what happens when you need to file a claim? Even more troubling – what if the insurer denies coverage?
Insurance Disputes in the Commercial Context
In many situations, homeowners and contractors alike are unpleasantly surprised when an insurance company denies coverage. Whether you’re a homeowner filing a claim for a construction defect or a builder, subcontractor, or developer submitting a claim for liability coverage, insurance companies don’t always automatically extend coverage. Even with a comprehensive policy, your insurer might cite exclusions as a basis for denying coverage.
Construction defects often trigger two types of insurance claims. Suppose a homeowner discovers a leaking roof, resulting in water damage and, later, mold. The homeowner files a construction defect claim, and the contractor files a claim with its liability provider. Both sides experience frustration when the insurance company denies coverage based on various policy exclusions.
Missouri courts have held that although a liability policy might exclude the cost of repairing a defect, the insurer must extend coverage for any consequential damages. In the case of the defective, leaking roof, for example, the insurance company might not have to cover the cost of the roof repair, but it must provide coverage for the water damage and mold caused by the leak.
When to File a Claim
Every insurance policy has its own specific rules that dictate when a policyholder must file a claim, and many insurers impose strict deadlines by which to file formal claims and damage estimates. Whatever your insurer’s timeline, it’s good practice to notify your carrier as soon as you discover damage or evidence of a defect. Providing prompt notice gives your insurer an opportunity to conduct inspections and prepare reports. Just remember that, at this stage, you’re not obligated to disclose opinions or facts about how the damage occurred.
Experienced Real Estate Attorneys
To discuss your real estate matter with one of our experienced business attorneys, call our office today at 417-841-2775. You can also get in touch by using our online contact form.
This website has been prepared by The Law Office of Randy L. Smith, LLC for informational purposes only and does not, and is not intended to, constitute legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.