The Expert Podcast

• The current real estate market and construction industry backlogs are not only causing delays in building homes or doing renovations but are also affecting the insurance industry.
• The difficulty in sourcing materials and finding quality labor is leading to an increase in construction defect insurance claims.

• Contractors and builders need to ensure they have appropriate coverage for construction defects, which may be covered under their surety bond policies.
• Claims may arise from issues such as:
  • Improper installation of materials
  • Missing installations
  • Misalignment of trades or mechanical systems with the framing

• An example of a construction defect: a plumbing vent stack improperly aligned against a ceiling joist. This could have resulted in a catastrophic plumbing failure.

• Due to significant changes in the construction industry over the past 24 months, contractors should assess whether additional coverage is necessary and ensure their current policies are up to date.
• Having a dedicated quality control person review projects is crucial, especially to catch defects that might not be identified during inspections or by permits.
• Some defects may not be caught by inspectors, particularly those that aren't related to safety, framing, electrical, or plumbing, and could show up later.