Construction Insurance News

How to Control Potential Construction Surety Claims

June 21, 2017
Richard Korman - Engineering News-Record

The relationship between construction management and general contracting powerhouse Crossland Construction Co. and insurance broker and surety bond producer IMA Inc., both based in Kansas, goes back 30 years and involves many people. One of them is Columbus-based Maurice Harley, a senior financial analyst with Crossland, who has spent most of his career involved with risk, surety and construction. Monica Donatelli, who began her career in banking, is now a surety manager with IMA Inc. She is based in Overland Park, Ka.

Mr. Korman may be contacted at kormanr@enr.com


Occurrence is Covered Where Pollution Event Is Not Efficient Proximate Cause Of Loss

June 15, 2017
Tred R. Eyerly - Insurance Law Hawaii

Although the policy excluded pollution, the negligence that preceded the escape of the pollution was the efficient proximate cause, negating the impact of the pollution exclusion. Xia v. ProBuilders Specialty Ins. Co. RRG, 2017 Wash. LEXIS 443 (Wash. April 27, 2017).

Zhaoyun Xia purchased a new home in May 2006. The home was constructed by Issaquah Highlands 48 LLC. Issaquah Highlands had a CGL policy issued by ProBuilders.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Insurance Company Not Responsible For Paying Pre-Tender Legal Fees

June 5, 2017
Robert H. de Flesco III, Esq. - Florida Construction Law News

Insurance carriers can breathe a little easier. The Eleventh Circuit recently ruled, in EmbroidMe.com, Inc. v. Travelers Property & Casualty Co. of America, that an insurer did not have to pay attorneys’ fees incurred by its insured before the insured notified it of the litigation.[1]

Mr. de Flesco may be contacted at robert.deflesco@csklegal.com


Home Capital Halts Dividend, Adds Former Pension Executives

May 10, 2017
Maciej Onoszko & Kim Chipman - Bloomberg

Home Capital Group Inc. suspended its dividend and added two former pension fund executives to its board as the mortgage lender tries to win back shareholder trust following accusations that it misled investors over fraudulent loan applications.

The Toronto-based lender, facing a run on deposits, said it will suspend its quarterly dividend to “manage liquidity,” according to a statement Monday. The company’s high-interest savings accounts, used to fund its mortgages, have slipped to C$192 million ($140 million), from almost C$2 billion five weeks ago. The guaranteed investment certificates, or GICS, fell to C$12.6 billion, from C$12.9 billion last month.


Do I Really Need My Own Lawyer if the Insurer is Giving Me One? (Law Note; Tip)

May 3, 2017
Melissa Dewey Brumback - Construction Law in North Carolina

Several readers have reached out to me about my post on getting a Reservation of Rights letter with comments and questions. The most common refrain has been something along the lines of: “Do I really have to hire my own lawyer after paying insurance premiums just because I got one of those pesky ROR letters?”

The short answer is that you do not *have* to hire your own lawyer. But, it can be very useful. And, it can be done economically so you don’t have to break the piggy bank. You see, if you hire your own lawyer, they can be “back up” and simply monitor the lawsuit, while the insurance-retained lawyer does the yeoman’s work. That way, if the insurance carrier begins to make noise about filing a declaratory judgment to deny the claim, you have your own lawyer already in place, knowledgeable about what’s happened in the case from the get-go. But if the insurance company never “pulls the trigger” on denying the claim, then your private lawyer’s involvement (and bill) will be minimal.

Ms. Brumback may be contacted at mbrumback@rl-law.com


Insurance Customers Need to Get Used to Talking to Machines

April 20, 2017
Oliver Suess - Bloomberg

Frustrated with automated answering machines before you finally get to speak with a customer service representative? When it comes to insurance, you’ll just as likely end up dealing with a robot as a human within three years, according to a survey by Accenture Plc.


Insurers Fine-Tune Professional Liability Premiums

April 13, 2017
Richard Korman - Engineering News-Record

Recent claims are playing a larger role in the way insurance underwriters analyze a particular risk in coverage for engineers and architects, says broker Ames & Gough.

Mr. Korman may be contacted at kormanr@enr.com


Attorney Allowed to Withdraw When Insolvent Insurer No Longer Pays for Defense

April 5, 2017
Tred R. Eyerly – Insurance Law Hawaii

The magistrate recommended that the attorney's motion to withdraw from further representation of the insured be granted when the insurer was liquidated and no longer paying for defense costs. U.S. v. Estate of Lillian Wiesner, 2017 U.S. Dist. LEXIS 38257 (E.D. N. Y March 15, 2017).

Mr. Eyerly may be contacted at te@hawaiilawyer.com


No Bad Faith Failure to Indemnify for Punitive Damages

March 29, 2017
Tred R. Eyerly – Insurance Law Hawaii

The court determined the insurer did not act in bad faith when it failed to indemnify the insured for an award of punitive damages. Bensalem Racing Ass/n v. Ace Prop. & Cas. Ins. Co., 2017 Phila. Ct. Com. Pl. LEXIS 11 (Pa. D. Jan. 20, 2017).

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Insurers Fine-Tune Professional Liability Premiums

March 22, 2017
Richard Korman - Engineerings News-Record

Recent claims are playing a larger role in the way insurance underwriters analyze a particular risk in coverage for engineers and architects, says broker Ames & Gough.

Mr. Korman may be contacted at kormanr@enr.com


"Is the Defective Work Covered by Insurance?"

March 16, 2017
David Adelstein – Florida Construction Legal Updates

I have been asked this question quite a bit from owners, in particular: “The contractor committed defective work, but it has insurance. Doesn’t the insurance cover this defective work?” Ugh, NO! There is this misconception that liability insurance, specifically, is the be-all-and-end-all when it comes to defective work. This could not be further from the truth. Don’t get me wrong – liability insurance is important; it is very, very important. However, liability insurance does not cover the risk of an insured’s defective work. Rather, liability insurance is designed to cover the risk of resulting damage: damage resulting from defective work. This is a significant distinction and one that is often overlooked. This is also why anyone encountering defective work should be working with an attorney to maximize insurance coverage or realize that the issue is not covered by insurance.

Mr. Adelstein may be contacted at dadelstein@gmail.com


Carlyle, CVC, KKR Said to Bid for Onex's USI Insurance

March 1, 2017
Kiel Porter & Scott Deveau - Bloomberg

Carlyle Group LP, CVC Capital Partners and KKR & Co. are among suitors that have made first-round bids for Onex Corp.’s USI Insurance Services, according to people familiar with the matter.

The initial offers value the Valhalla, New York-based insurer at more than $4 billion, said the people, who asked not to be identified because the details are private. The sale process may attract interest from other bidders as well, the people said. Toronto-based Onex is working with Bank of America Corp. to advise on the process, one of the people said.


Quick Note: Importance of Equipment Floater Insurance

February 23, 2017
David Adelstein – Florida Construction Legal Updates

A recent case out of New York held that damage to a tower crane from a storm during construction is excluded from a builder’s risk policy because a tower crane is a machine that fits within the contractor’s tools exclusion, a common exclusion in builder’s risk policies. (Check out this article for a discussion on this case.) This case exemplifies the importance of a contractor that owns or leases equipment, such as a crane, to obtain equipment floater insurance (or inland marine insurance coverage).

Mr. Adelstein may be contacted at dadelstein@gmail.com


Insurer Cannot Escape Indemnity Obligations Through Cut-And-Paste Reservation of Rights

February 16, 2017
Tred R. Eyerly – Insurance Law Hawaii

The South Carolina Supreme Court found that the Special Referee correctly determined that the insurer failed to reserve the right to contest coverage of actual damages and punitive damages under the CGL policies. Harleysville Group Ins. v. Heritage Communities, Inc., 2017 S.C. LEXIS 8 (S.C. Jan. 11, 2017).

Two developments, the Riverwalk and Magnolia North, were constructed between 1997 and 2000 by Heritage. After construction and sale of the units, the purchasers became aware of construction problems, including building code violations, structural deficiencies, and significant water-intrusion problems. In 2003, the property owners' associations (POAs) filed suit to recover damages for repairs to their homes.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Hawaii Legislature Considers Parametric Insurance for Hurricane Risk

February 2, 2017
Tred R. Eyerly - Insurance Law Hawaii

In SB 799, the Hawaii state legislature proposes creating a parametric risk transfer facility which would move hurricane risk into the private market with insurance and reinsurance carriers.

The bill explains that parametric, or index-based, insurance solutions settle claims on the characteristics of a disaster, as opposed to the loss sustained from the disaster. The bill further explains that unlike traditional insurance, parametric solutions do not require lengthy loss adjustment processes, instead enabling rapid disbursement of payouts to maximize liquidity and allow for flexibility in the use of the proceeds. The trigger for parametric insurance coverage for a natural disaster could be based on the maximum wind speed of the hurricane as it passes through a specific covered area, such as maximum winds of ninety-six miles per hour or higher.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Contractors Request and Pay For Untested Builders Risk Exclusions

January 26, 2017
Scott Van Voorhis – Engineering News-Record

Until recently, the list of what would be covered or excluded in a typical builders risk insurance policy was often a cut-and-dried affair. But these days, many construction and engineering companies are seeking a more flexible range of exclusions that had been used mostly on energy and industrial projects.

ENR may be contacted at ENR.com@bnpmedia.com


Cal Beyer: Boosting Industry Awareness About Suicide Prevention

January 19, 2017
Mark Shaw - Engineering News-Record

Cal Beyer has spent most of his career trying to save lives. Beyer, 55, who has worked for nearly 30 years as a risk and insurance professional, recently took his vast safety experience in a new direction—helping the construction industry to prevent suicides within its ranks.

Mr. Shaw may be contacted at shawm@enr.com


Contractors Request and Pay For Untested Builders Risk Exclusions

January 13, 2017
Scott Van Voorhis - Engineering News-Record

Until recently, the list of what would be covered or excluded in a typical builders risk insurance policy was often a cut-and-dried affair. But these days, many construction and engineering companies are seeking a more flexible range of exclusions that had been used mostly on energy and industrial projects.

ENR staff may be contacted at ENR.com@bnpmedia.com


The Construction Risk Picture Remained Busy in 2016

January 5, 2017
Richard Korman – Engineering News-Record

In design and construction, liability arose from sources both expected and unexpected. When it came to risk, 2016 was notable for setbacks and initiatives in worker safety and some tough lessons about flawed bridges.

Mr. Korman may be contacted at kormanr@enr.com


Prudential Whistle-Blower Rocks the Boat on Wells Fargo Scandal

December 21, 2016
David Voreacos & Katherine Chiglinsky – Bloomberg

Julie Broderick had 15 years of experience as a securities regulator and a propensity for speaking her mind before joining Prudential Financial Inc. as an investigative supervisor in 2012. When she sought this year to learn more about possible sales abuses by one of the insurer’s business partners, she said, the message from her company was clear: “Don’t rock the boat, don’t speak up, toe the party line and your job will be safe.”

Then she was fired along with two colleagues. They responded with a whistle-blower lawsuit containing allegations that led to state probes about whether Wells Fargo & Co. signed up people for Prudential’s MyTerm insurance without their permission. And even after the insurer halted sales through the bank last week, Broderick is calling out her former employer and saying the company let down customers.
Reprinted courtesy of David Voreacos, Bloomberg and Katherine Chiglinsky, Bloomberg


FEMA's Director Wants Capitalism to Protect Us From Climate Change

December 15, 2016
Christopher Flavelle – Bloomberg

In January, Federal Emergency Management Agency administrator Craig Fugate gave states a choice for dealing with climate change. Option A: Do nothing about the rising toll of extreme weather, and hope Congress's threats to restrict disaster aid -- by raising the damage threshold required to receive that aid -- never come to pass. Option B was more interesting.

FEMA suggested what it called a disaster deductible: State governments would be on the hook for some of the cost of cleaning up after hurricanes, floods and other calamities. But they could lower that deductible by taking steps to reduce their exposure -- for example, by passing tougher building codes.


Home Insurance, but With a Philanthropic Twist

December 8, 2016
Rob Walker – Bloomberg

Aviv Gadot has lived in three different apartments in New York City but never purchased renters insurance. “I don’t trust the companies,” the software developer says. “I know they’ll do everything in their power to keep my money.” His attitude changed recently after he heard about a startup called Lemonade that began offering homeowners and renters insurance in New York state in September.

Along with an easy-to-use app, the carrier promotes a distinct business model. Lemonade keeps a flat 20 percent of your premium; an additional portion, as much as 40 percent, goes toward reinsurance (in case a catastrophe results in claims that outstrip premiums); the rest is set aside to cover claims. The twist: Whatever’s left over at yearend goes to charities picked by the customers.


Surety Sues Louisiana School District Over Payment to Contractor

November 30, 2016
Scott Van Voorhis – Engineering News-Record

A surety is suing a Louisiana school board for $890,270 over an arts-center project on which the prime contractor defaulted.

ENR may be contacted at ENR.com@bnpmedia.com


Anbang Said Near $2.3 Billion Property Deal With Blackstone

November 23, 2016
Cathy Chan – Bloomberg

Anbang Insurance Group Co. is close to buying residential property assets in Japan from Blackstone Group LP, its first foray in the country since a failed bid for an asset manager last year, people familiar with the matter said.



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