Help avoid the basic types of construction defect claims

Knowing the four types of construction defects can better position your business for success.

Every contractor knows that things can change quickly on a job site. Have you ever been part of a construction project when something went terribly wrong, like a sudden water pipe burst? The silver lining is, this type of construction defect can be immediately known and addressed, while on the other hand, some projects may take years for the defect to be noticed.

Whether construction defects are known today or appear years later, they're a concern for any contractor.  And where the work is performed may add an additional layer of complexity as state laws vary greatly. If a contractor is working on a local project, they're likely familiar with the local laws and requirements. But, if an out-of-state contractor is brought in, they may not be.

There are four types of construction defects:

  1. Design deficiencies: Here the problem lies in the design. In these defects, the buildings or systems designed by architects and engineers don't work as intended, or as expected.
  2. Product or Material Insufficiencies: Despite proper design and installation, the issues happen because the product or materials used were defective or damaged. This could also be materials that are inferior in quality or standard and may not function or last as long as expected.
  3. Construction Process Failures: Poor quality workmanship can result in a range of damages from plumbing leaks, electrical or mechanical problems or cracks in foundations or walls.
  4. Operation and Maintenance: Once construction is complete, it's critical that the construction is maintained effectively. Exterior sealants may only last 4-5 years depending on the environment. Without proper maintenance failed sealants can cause water intrusion, most commonly around windows and doors.

With today's evolving technology, improvements in building materials emerge faster than building codes can be updated. For instance, increasing uses of solar panel systems aren't addressed in many commercial roof specifications. Things like wind-loads or weight capacities are leading designers to follow codes that may no longer be relevant. These innovations satisfy consumer's demands for more eco-friendly products, but on the flip side, they expose contractors to liability for unintended results.

Here are a few thoughts for contractors to consider regarding construction defect claims:

  • Stay on top of current building codes and standards
  • Understand and follow MFG guidelines to ensure proper installation and limitations.
  • Pre-qualify employees that are hired to ensure they have the skills to deliver the kind of work expected by you and your clients.
  • Hire experienced sub-contractors that you are familiar with and have proven their skills.
  • Document processes and materials that may be needed, even years after the projects are completed and keep your records.
  • Develop a quality assurance / quality control program.
  • Take advantage of risk transfer opportunities through contracts vetted through legal counsel.

By staying on top of evolving standards, monitoring your on-going projects and engaging the right insurer, you can help avoid construction defect pitfalls and better position your business for success.

State Auto Insurance makes no representations or guarantee as to the correctness or sufficiency of any information contained herein, nor guarantees results based upon use of this information. State Auto does not warrant that reliance upon this document will prevent accident and losses or satisfy federal, state and local codes, ordinances and regulations. The reader assumes entire risk as to use of this information.

A strong, well-written subcontract agreement is a must for any good contractor to remain profitable...