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Construction Defect Basics
COVERAGE Coverage falls under Coverage A of the comprehensive general liability policy. The policy must include products / completed operations coverage, designated in the policy declarations. * The work of the insured contractor or owner/builder must have been completed prior to the termination of coverage or else there would be no possibility of an occurrence under the policy. * Excluded from coverage is damage to the insured's product or work itself. * Excluded also is resultant impairment of property due the insured's defective product or work. * Damages must be either property damage, physical injury to tangible property, or loss of use associated with the property damage. Some construction defects do not result in property damage and so would not be covered. Continuing occurrences may act as a continuous trigger of coverage in some jurisdictions such as California.
LIABILITY Strict liability applies to builders of mass-produced housing for claims by the purchasers (Kriegler v. Eichler Homes, Inc., (1969) 269 Cal.App.2d 224). This doctrine applies only to the owner of the development. Liability of the owner's contractors, subcontractors, and design professionals is determined by a
negligence standard. For other construction, the negligence standard applies to the owner as well. A violation of a building code is
negligence per se. Look up statutes of repose.
COMMERCIAL Plans and specifications are usually prepared by the architect under a contract with the owner. The architect, in turn, contracts with various engineers including structural, mechanical, electrical, civil to prepare plans and specifications. The owner generally contracts with a geotechnical engineer to determine the
adequacy of either the natural or engineered earth on which the building is to be placed. All plans and engineering reports are incorporated into the general contract. The general contractor usually subcontracts out to various trades a majority of the work. The owner sometimes contracts with a construction manager to see that work is done in conformity with the contract documents.
RESIDENTIAL Housing construction is frequently done directly by the owner. In these instances there are frequent deviations from the plans and specifications. This would not necessarily constitute a defect, unless there is a violation of a building code or other ordinance.
INVESTIGATION All contracts, as well as the plans and specifications, are each key documents. They define the scope of the work of the various subcontractors. They generally contain indemnification provisions that may significantly affect the liabilities of the various parties. They often carry requirements for obtaining insurance and sometimes naming other parties as additional insureds. There is no coverage for failure to provide insurance because the resultant damages are not covered by a general liability policy. Please refer to the contractual liability provision provision of the policy.
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