Who Pays for Construction Defect Damages? Amerisure Case Sheds Some Light
Construction defects can cause serious headaches for homeowners. Cracked walls, faulty railings, water damage—what happens when these expensive issues arise? The big question is, who foots the bill? Is it the construction company? Or does the insurance company step in?
The legal battle between Amerisure Insurance Co. and The Peninsula at St. John’s condominium in Florida offers an interesting look at the answer. But heads up, this case is just one example, not a universal rule. Every situation is different.
What Happened?
Years after the condos were built in Jacksonville, Florida, residents started noticing problems. Cracking brick veneers. Corroding railings. Not small fixes. The condominium association went after the construction company, claiming their work caused all this damage.
Now, here’s where it gets tricky. The builder had insurance with Amerisure, and you’d think they’d cover the costs, right? But Amerisure said no. The $8.5 million settlement for these defects wasn’t their responsibility, and they refused to pay.
Why Didn’t the Insurer Cover It?
Insurance policies can be complicated. Amerisure’s commercial general liability (CGL) policies didn’t kick in for a few reasons. First, the insurance company was able to prove that the damage happened outside the policy period. Think about it like car insurance. If you crash your car today, but your policy ended last month, your insurer isn’t paying for that accident.
Second, insurance doesn’t typically cover fixing construction mistakes themselves. For example, if something wasn’t built correctly in the first place, insurers don’t consider it their problem. This was a major point in this case.
What About the Settlement Agreement?
To make things more interesting, there was an $8.5 million settlement between the construction company and the condo owners through something called a “Coblentz agreement.” Here’s how it works. The builder basically said to the homeowners, “You can try getting that money from our insurer since we can’t pay it.” Sounds simple enough, right?
Not so fast. The court smelled trouble with the agreement. It wasn’t transparent about what part of the settlement covered legitimate insurance claims versus uncovered issues. Plus, the court found some red flags around whether the deal was truly fair. They threw the whole thing out.
Does This Mean Construction Companies Always Pay?
Not at all. Cases like these depend on what the insurance policy says, when the damage happened, and even how the claims are handled. Sometimes, insurance companies cover everything. Other times, they walk away. It all comes down to the details.
What Should Homeowners Know?
If you’re living in a building with defects, don’t panic. This case shows that responsibility isn’t always black and white. Damages might be covered by builders, their insurance companies, or even other parties involved in construction. Understanding who is responsible takes time.
Here’s a tip, though. If you notice problems, act fast. Waiting too long to report damage could affect your claim, especially if insurance is involved.
And For Builders?
Contractors and construction companies should pay close attention to their insurance policies. Make sure the coverage matches the risks. When things go south, clear and fair settlements are crucial. That can make all the difference between being backed by insurance or stuck with the tab.
The Key Takeaway
The Amerisure case answers some questions but leaves others open. Construction defect cases are like puzzles, and every piece matters. One case might shift costs to insurance. Another leaves the builder holding the bag.
For homeowners, this story is a reminder of how messy these disputes can get. But don’t worry. Whether it’s your condo or your carrier, there’s usually a way to find a solution.