Article Date: 09/06/2013


State Supreme Court: Commercial General Liability Insurance Policy Covers Policyholder’s Pre-Litigation Costs to Repair Its Defective Construction Work Despite Lack of Insurance Company Consent


By Scott Turner

 

Late last month, a state Supreme Court issued a decision holding that an insurance company within that state must pay its policyholder’s pre-litigation costs to locate and repair its defective construction work even though the insurance company refused to consent to the repair program.

 

The ConstructionPro Week summary of this case is available to ConstructionPro Network members and includes:

  • The citation for the case
  • The details of the case
  • Author’s commentary
  • A link to the complete PDF copy of the original opinion

Here is a portion of the author's commentary:

 

"The ability to settle a claim without litigation and without the insurance company’s consent is particularly important to property damage involving a policyholder’s ongoing construction work at a project. Typically, unless and until the policyholder accepts responsibility for the liability and promises to repair or replace it at its own cost, relationships with the general contractor and/or owner at the project often are irreparably damaged, frequently leading to the policyholder leaving the project before completing its work and causing a huge additional economic loss to all concerned. The general contractor and/or owner may be major customers of the policyholder. Such a scenario also can sour what had up until then been a vitally important business relationship."

 



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