Construction Risk Management Through Insurance
A comprehensive look at insurance for contractors and subcontractors, from the perspectives of an experienced construction law attorney and an insurance professional.
Brian Flaherty was a chapter co-author (with Chris Duncan, CLCS, FarmerWoods Group) of “Construction Risk Management Through Insurance,” Arizona Construction Law Practice Manual, 3rd Ed., 2016
Construction Risk Management Through Insurance is comprised of four major sections, each of which is provided on this website as a separate “article”:
- Common Construction Insurance Coverages
- Insurance Coverage Fundamentals
- Common Insurance Coverage Exclusions
- Endorsements Typically Used in the Construction Industry
The articles listed above do not include footnotes or citations. That detail is included in a PDF of “Construction Risk Management Through Insurance,” which includes all four chapters and the commentary that appears below.
One of the most important services construction lawyers can provide their clients is counseling in risk management. Their experience within the construction industry has made them generally aware of the risks that regularly confront their clients. In addition, lawyers who routinely practice in this area have observed the expansion of existing risk and the emergence of new risk through recent appellate court and legislative authority. When construction lawyers couple these advantages with a working knowledge of the available insurance products that specifically address these existing and emerging construction risks, they can make a significant contribution to the risk management programs of their clients.
The construction law lawyer should have a working knowledge of the basic principles and application of contractual indemnification. To that end, the lawyer must be familiar with the insurance products available in the construction industry and the prerequisites for coverage, the most troublesome of which are “property damage” and “occurrence.”
The allegations contained in a complaint arising from a dispute concerning construction may well trigger coverage under a contractor’s CGL policy or under the project’s builder’s risk policy. A construction law lawyer, when presented with a complaint, should carefully consider whether the allegations could possibly evoke coverage. If such allegations are found, the complaint should immediately be tendered to the insured’s insurance broker with the invitation that the insurer defend and indemnify. It would be most embarrassing for a construction law lawyer, who for many months had undertaken the defense of his or her client at considerable expense to the client, later to realize that certain allegations in the complaint evoked insurance coverage, such that the entire action would have been defended at the expense of the client’s insurer.