Completed Operations Liability and Construction Defects

The most well-known construction defect of all-time has become quite the tourist attraction. The 200-year long building project now known as the “Leaning Tower of Pisa” draws travelers from all over the world. Unfortunately, construction owners can’t expect to receive the same admiration for their own, modern day completed defects. In fact, discovered faults post operation completion is one of the main reasons construction companies get sued. Here’s what you need to know about completed operations liability.

What Are Construction Defects?

A construction defect is anything that arises from problems with the design and installation of a product. IRMI.com offers this generally accepted definition:

“A deficiency in the design or construction of a building or structure resulting from a failure to design or construct in a reasonably workmanlike manner, and/or in accordance with a buyer’s reasonable expectation.”

If this issue arises during operation or maintenance and can be traced back to the original installment or planning, it is classified as a construction defect as well. Lawsuits over construction defects aren’t limited to large jobs, they can happen on all sizes and categories of projects. Everyone involved in the job can be affected by the defect, whether they are architects, contractors, or specialists like electricians. The legal fees and possible damages can crush a company’s finances and the proceedings can severely damage their reputation.

Types of Defects

Often the defects that happen in the construction industry are divided into two categories. Non-serious defects are those that don’t offer the opportunity of injury to the user. Serious or dangerous defects could actually threaten the health of the users or inhabitants. Typically, defects arise from the following causes:

• Flawed design
• Defective or low-quality material
• Installment or construction mistakes

Prevention and Insurance

The construction industry faces huge exposure to loss in the form of litigation for defects. It’s imperative to have systems in place to educated and enforce industry best practices. This is true whether the project is a skyscraper or a valve in a bathtub. Maintaining a close relationship with workers and subcontractors is also vital. Beyond that, a construction company must have a strong general liability coverage to ensure they are protected and stay maintain a good relationship with their insurance agent and provider.

The crux of the issue is that in construction, just by doing your job you are opened to all sorts of exposure, from workman’s comp to completed operations defects. Be sure to contact us at H&K Insurance, in Watertown, MA so that we can help make sure you are covered to the degree you require. We have a dedicated team of experts and we offer many specialty plans for construction companies in addition to a full spectrum of insurance plans. We would love to hear from you and help review your current coverages to identify any weaknesses or answer any questions.

John Herlihy has served H & K Insurance Agency Inc. clients since 1982. John, the Vice President, is engaged in all phases of the agency’s operations and management. He is dedicated to providing excellent service. John’s professional designation of CIC (Certified Insurance Counselor) signifies to clients a competent professional and their assurance of quality assistance with their insurance needs.