Posted On: August 16, 2004, 8:29 pm CDT

Posted By: Mark W. Kinsey, CRA

OK one of my favorite topics! Think about the attorney who has recommended to their client (the General Contractor) that the language in the contract is acceptable to the project. Now you are a subcontractor who has always done work on a handshake and you think this one will be ok too. Well folks it's time to wake up. This has become a big business in a mostly unregulated industry. IN Pennsylvania there is no registration of contractors or licensing on a state wide basis. So the contract rules. The two construction defect lawsuits brought against my contractors have all come from the INSURANCE Industry!! Home owner company adjustors who, and I quote stated, "A wire was placed in close proximity to a staple and the normal vibration of the house over a 5 year period caused the casing to rub off which created an arch and spark which was the proximate cause of the fire" end quote. How they determined that after the entire house burnt to the ground and the fire marshal on the scene at the time of the fire and through his investigation could find no such evidence to support that theory is mute. It cost my clients insurance company $50,000 to get my clients name removed from the lawsuit which went away. In an ironic twist the same contractor rebuilt the house and the homeowners company paid him. Life is good!
The second case is similiar and has just begun but it is brought by another homeowners company after a fire.

The primary problem here is one previously stated..."It's all about the contract, dummy". Get it right and what you screwed up your responsible for, what the subs do is on them. One major problem in the standard market though is the lack of the proper endorsement filings OR their total lack of willingness to insure through endorsements. In there absence how does a contractor insure the future insurability of their subcontractors? I'm still baffled by my insurance companies unwillingness to address that question with a response.