Articles Posted in Construction

Published on:

GettyImages-1352455992-300x200Earlier in 2022, CBRE forecasted a 14.1% year-over-year increase in construction costs by year-end 2022, as labor and material costs continue to rise, despite the expectation that overall cost inflation for materials would begin to cool by the end of the year. Commercial construction costs have indeed increased, as Turner Construction Company’s Third Quarter 2022 Building Cost Index reported an 8.62% yearly increase from the third quarter of 2021, a 2.18% quarterly increase from the second quarter of 2022. In addition to supply chain issues for building materials, skilled labor shortages and construction wage growth persists.

Continue Reading ›

Published on:

overhead image of a contract on a clipboard, construction helmet, gloves, edge of laptopIn a previous post, we addressed blanket additional insured endorsements and the role they play in passing insurance obligations downstream. In short, the purpose of a “blanket” endorsement is to grant additional insured status to any company as required in a written contract with the named insured. This obligation often begins in the prime contract where the owner requires additional insured status on the general contractor’s insurance. However, the general contractor typically attempts to pass this obligation downstream to its subcontractor by including a requirement in the subcontract that both the general contractor and owner are named as additional insureds. But what happens if there is no written agreement between the named insured and the company seeking additional insured status, or if there are multiple required additional insured entities and only some have contractual privity with the subcontractor?

Continue Reading ›

Published on:

id585177932-construction-300x300Times of crisis can bring out the best in people. Unfortunately, times like this can also be an opportunity for exploitation of inexpensive, and potentially forced, labor. As America reopens its economy, it is likely that we will begin to see a surge in many industries. The resulting demand for labor, coupled with unprecedented unemployment and related desperation not only in America, but worldwide, could lead unscrupulous individuals and companies to exploit American and foreign workers. We saw this with previous disasters, such as Hurricane Katrina, where foreign laborers were exploited in the rebuilding process with false promises of citizenship. Now, to be clear, exploitation occurs even during times of economic prosperity; however, it can be even more pronounced and egregious when people must deal with uncertainties and hardships never before experienced in their lifetimes.

Continue Reading ›

Published on:

iStock-647974754-unripe-300x200It’s a familiar story to anyone involved in insurance claims. A policyholder is sued and tenders the claim to its insurer. The insurer agrees to defend subject to a reservation of rights, but it also asserts that policy exclusions may ultimately preclude coverage. While the underlying litigation is ongoing, the insurer files suit against the policyholder seeking a declaration that it does not have a duty to indemnify if liability is established against the policyholder in that litigation.

Continue Reading ›

Published on:

Merriam-Webster-logo-300x300A little under two years ago, we wrote about the fatal Oxford comma—you know, the one that comes before “and” in a list—and the impact of its omission on a court’s interpretation of a Maine employment statute. The court effectively gave a $10 million lesson in grammar and ambiguity, but its holding was not revolutionary to a coverage attorney.

Continue Reading ›

Published on:

iStock-535399524-construction-300x200Last week, the Ohio Supreme Court unfortunately narrowed the scope of coverage for a subcontractor’s faulty workmanship. The court held in Ohio Northern University v. Charles Construction Services, Inc. that faulty workmanship in a construction defect case is not an “occurrence” under standard-form CGL policies in Ohio. The circumstances will sound familiar to anyone involved in the construction industry: Ohio Northern University retained Charles Construction to build a hotel and conference center on campus. The contract required Charles to maintain a CGL policy with Products-Completed Operations-Hazard coverage. Charles obtained a policy from Cincinnati Insurance Company with the required coverage.

Continue Reading ›

Published on:

Developers need to keep an open mind to protect themselves against construction defect claims. Insurance is a vital tool, but it should not be the only one in a developer’s risk management toolbox.iStock-645199404-apartments-300x203

Another useful tool—the ability to disclaim all liability for future construction defect claims when the property is sold to a third party and converted to condominiums—was recently upheld in South Carolina. In Long Grove at Seaside Farms, LLC et al. v Long Grove Property Owners’ Association Inc. et al., the South Carolina Supreme Court dismissed a previously accepted writ of certiorari as improvidently granted, thereby upholding the decisions of the trial and appellate courts dismissing defective construction claims brought by a condominium association against the original developer of an apartment complex.

Continue Reading ›

Published on:

It is axiomatic that in order to obtain insurance coverage a policyholder must first establish that a claim falls within a policy’s insuring agreement before coverage under the policy is triggered. iStock-687501466-engineering-300x200For construction claims brought under CGL policies, that frequently means showing that the damages at issue constitute “property damage” caused by an “occurrence” (where “occurrence” is generally defined as “an accident”). While this requirement may often seem like a simple factual question, in the context of a subcontractor’s faulty workmanship, the analysis has proven more difficult. Where alleged faulty work causes damage only to the insured’s own work product, is the property damage accidental?

Continue Reading ›

Published on:

As James Taylor might say, I’ve seen fire and I’ve seen rain, but will my insurance cover the damage? California has certainly seen plenty of fire and rain. In the aftermath of the state’s most recent iStock-175506009-mud-slide-300x200devastating events, damages are estimated to top $5 billion. As Californians file insurance claims to cover their losses, coverage for flooding and mudslide damage has come into focus.

Continue Reading ›

Published on:

Any construction professional working in Florida likely is familiar with the state’s notice and opportunity to repair statute (“chapter 558”) that creates a process for trying to resolve construction defect claims without litigation. As the first step in this mandatory process, a property owner must serve a chapter 558 notice on the construction professional, which notice describes the alleged defects and damages. Construction-image-300x200Many construction professionals submit chapter 558 notices to their general liability insurers and request a defense. But it has always been an open question whether the chapter 558 process is a “suit” triggering an insurer’s duty to defend—until now. In Altman Contractors, Inc. v. Crum & Forster Specialty Insurance Company, the Florida Supreme Court decided that the chapter 558 process is a “suit” but left open the possibility that the process is only a “suit” when an insurer says it is. In a per curiam opinion in the original federal case, the U.S. Court of Appeals for the Eleventh Circuit relied on the Florida Supreme Court’s opinion to vacate the district court decision holding that the chapter 558 process is not a “suit” and remanded the case for further proceedings.

Continue Reading ›