Contractors Meet with Mendoza to Address Concerns over Rising Liability Rates

August 27, 2002

A group of 25 insurance brokers and contractors recently met with Republican Insurance Commissioner candidate Gary Mendoza to discuss rising liability insurance rates in the Inland Valley, according to the Los Angeles Times.

The increasing rates and in some cases, inability to get a policy, has reportedly sent some contractors out of business and will ultimately determine rates to build new homes, said the group.

They are pushing for state legislation to allow homeowners to go through an arbitration process to get their homes repaired by the builder instead of first going to the courts. Current California law holds contractors liable for construction defects for 10 years.

The past couple of years have seen an increase in lawsuits, according to contractors, who also allege that large insurance companies are either no longer offering policies or are charging up to six times more than they were previously.

According to Frank Williams, CEO of the Baldy View chapter of the Building Industry Association, rate increases are also affecting the building of apartments and condominiums.

He attributes some of the problems to trail lawyers soliciting homeowners at the 10-year deadline for filing lawsuits against construction defects, including mold. He says some claims are legitimate, but many others are not.

The group favors the arbitration process to be set up and get homes fixed rather than paying out money to lawyers and for damages.

According to California Department of Insurance spokesperson Nanci Kramer, trail lawyers and consumer groups haven’t supported the arbitration concept. She said a similar system was set up for malpractice, but did not succeed in keeping insurance rates down.

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