It would be an understatement to say that outcomes in construction defect cases are heavily influenced by the insurance available to the parties. Insurance issues can dominate a case. One of the many challenges we face in our practice representing community associations is the underinsured developer or declarant. Unfortunately, a developer who cuts corners in the design and construction of a community frequently neglects to obtain adequate insurance. And many times the developer fails to obtain any insurance at all. When the developer is a single purpose LLC with no assets and no insurance, this can leave a “hole” in the case for the developer’s share of liability. Such a hole leaves the association holding the bag.

At Barker Martin we take a proactive approach to the resolution of the defendants’ insurance issues. We obtain available insurance policies and other information; analyze and track the relevant policy periods, terms and exclusions; and work in many cases to set up a separate process to resolve insurance coverage issues in advance of settlement discussions and trial. Given our unique expertise, we frequently take the lead in resolving a defendant’s insurance issues to free up the coverage for our clients. While it may seem strange for us to help a defendant, when it comes to obtaining insurance coverage our goals are aligned.

One of the ways we approach the underinsured developer is to determine if a claim can be made to the community association’s own insurance policy on behalf of the developer. But navigating the almost inevitable rejection of such a claim can be very complicated and may result in a separate lawsuit initiated by the insurer to interpret the language of its policy. In such circumstances, we bring our extensive experience to bear.

In a recent case in point, my colleague Jim Guse took the lead in successfully briefing and arguing a response to an insurer’s summary judgment motion where the insurer sought to defeat coverage under its policy for the developer. The federal magistrate judge’s detailed opinion can be found here. The court found in favor of coverage for the developer on the basis of our arguments and articulated a number of key principals that will hopefully streamline responses to similar motions in the future. This is just one example of our proactive approach to insurance in construction defect cases.

If you or your community has questions about insurance coverage or construction defect cases, please feel free to contact any of our attorneys.