Construction Insurance News

Will AIA's Revised Contract Options Prompt More Insurance Coverage?

August 17, 2017
Scott Van Voorhis & Richard Korman - Engineering News-Record

Builders risk insurance policies pack together different property insurance coverages for construction projects. They also often contain coverage for “civil authority” or “expediting cost” and “ingress/egress” insurance.

Reprinted courtesy of Scott Van Voorhis, ENR and Richard Korman, ENR

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


How to Reform Flood Insurance

August 10, 2017
H. Joseph Coughlin Jr. - Engineering News-Record

When FEMA’s National Flood Insurance Program (NFIP) expires next month, the pressure will be on Congress to reauthorize the program, ideally by adopting long-delayed reforms. Any discussion of NFIP reform should begin with an understanding of how it began, where it has gone and what is needed for its future.

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


Risk Allocation: What AIA's New Standard Form Agreements Say

August 2, 2017
Richard Korman - Engineering News-Record

As the managing director of the American Institute of Architect's Contract Documents program, Ken Cobleigh was responsible for the once-per-decade review-and-rewriting process that culminated in the release in April 2017 of the updated A201—the General Conditions for the Contract for Construction—and other related contract documents. The changes reflect in many ways the fast-changing methods of design and construction, including contract exhibits related to building-information modeling, sustainability and insurance. Cobleigh, who studied law at the University of Maryland, was a construction litigation attorney before joining AIA 11 years ago. He spoke with Deputy Editor Richard Korman about the new insurance exhibit and other matters related to the new AIA standard form agreements and risk allocation.

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


Insurer Must Defend Allegations of Misrepresentation

July 26, 2017
Tred R. Eyerly - Insurance Law Hawaii

The Montana Supreme Court held that the insurer had a duty to defend allegations of misrepresentation against the insured seller of a home. Huckins v. United Serv. Auto. Assoc., 2017 Mont. LEXIS 334 (Mont. June 13, 2017).

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


Additional Insured Not Covered When Injury Not Proximately Caused by Insured

July 19, 2017
Tred R. Eyerly - Insurance Law Hawaii

The New York Court of Appeals construed an additional insured endorsement as applying only to injury proximately caused by the named insured. Burlington Ins. Co. v. NYC Transit Auth., 2017 N.Y. LEXIS 1404 (N.Y. Ct. App. June 6, 2017).

Breaking Solutions, Inc. (BSI) contracted with the New York City Transit Authority (NYCTA) to provide equipment and personnel for BSI's tunnel excavation on a New York City subway construction project. BSI purchased commercial general liability insurance from Burlington with an endorsement that listed NYCTA and New York City as additional insureds.

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


New Earth Movement Exclusion Construed to Bar Coverage

July 13, 2017
Tred R. Eyerly - Insurance Law Hawaii

Facing an issue of first impression, the West Virginia Supreme Court ruled that property damage caused by either a man-made or a natural cause was excluded under the Insurance Service Office's 2013 earth movement endorsement. Erie Ins. Prop. & Cas. Co. v. Chaber, 2017 W. Va. LEXIS 430 (W. Va. June 1, 2017).

Five commercial rental units were located on the insureds' property. One unit was a motorcycle shop. Soil and rock slid down a hill and damaged the motorcycle shop. A claim was submitted to Erie.

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


Dispute Over Coverage for Snow Removal and Related Damage Survives Insurer's Summary Judgment Motion

June 29, 2017
Tred R. Eyerly - Insurance Law Hawaii

The federal district court largely denied the insurer's motion for summary judgment seeking a judgment of no coverage for snow removal and related property damage. Thurston Foods v. Wausau Bus. Ins. Co., 2017 U.S. Dist. LEXIS 74935 (D. Conn. May 17, 2017).

The insured was a food distributor with a warehouse that was constructed in 1990. It contained an industrial freezer. The freezer used a ventilation system under the freezer floor. In 2003, the insured constructed an addition to the freezer and expanded the ventilation system to include the area under the addition.

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


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



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