Materials Available: "What Insurance Does My Construction Project Need?" Webinar

On July 16, 2015 Foster Pepper attorney Greg Guedel presented a webinar titled “What Insurance Does My Construction Project Need?” The webinar was the third in an ongoing series focusing on pertinent construction topics. Greg provided an overview of key issues and strategies for assessing construction project risks and obtaining appropriate insurance policies within the overall project risk management program. Topics included: 

  • Project risk coverage under CGL, Builders Risk, and E&O policies.
  • Contractor payment, performance, and retainage bonds. 
  • Additional insured status for owners and consultants. 
  • Policy documentation and claims management.
If you missed the presentation, you can review the materials or listen to a recording of the webinar here. To find materials from other presentations on construction topics, click here and scroll to the bottom of the page. The next webinar in the series will be hosted in late October – look for an invitation in September.   

Lenders in Washington May Not Be Able to Rely Upon Lien Release Forms in Light of a Recent Ruling

As case law evolves, so do best practices. A recent lien foreclosure opinion published by Division II, Court of Appeals of the State of Washington, Shelcon Const. Grp., LLC v. Haymond, 2015 WL 3419603 (2015), may cause construction lenders to examine their practice of wholly relying upon recorded lien releases and, moving forward, to seek further assurances from the releasing party that it has been paid in full. Shelcon not only breaks new ground on whether lenders can reasonably rely on recorded lien releases, it also clarifies Washington law on when a mechanic’s lien attaches to property. In securing priority ahead of a lender’s deed of trust, the contractor in Shelcon was successful in arguing that: (1) its lien rights attached “several hours” ahead of a lender’s deed of trust, as the contractor had begun marking boundaries before the deed of trust was recorded; (2) even though it had already executed a lien release required by the lender, the contractor could later file a second lien to recapture those earlier, released amounts; (3) the lender was not entitled to rely solely on a lien release executed by the contractor and instead should have obtained further assurances from the contractor that it had been paid; and (4) the contractor was entitled to an award of legal fees and costs against the lender.

In hindsight, the lender may have avoided a lien priority dispute by using lien release forms containing explicit lien release language, ensuring that the contractor executed a subordination agreement, and securing written representations from the contractor confirming receipt of payment in full. Developers and owners may also learn from this ruling and consider reviewing their lien release forms in order to avoid “resurrected” liens on their projects. 


While the Court of Appeals describes this case as having a “long and complicated history,” certain unique facts are prominent in the Court’s findings. In early 2006, a developer, Scott Haymond (“Haymond”), through his business entities began contract negotiations for clearing, grading, demolition and excavation with an earthworks contractor, Shelcon Construction, LLC (“Shelcon”). A scope and fixed price were eventually established, and Shelcon began measuring the property’s boundary lines at 8:35 a.m. on July 5, 2006. Shelcon identified boundaries using fluorescent ribbon, a practice it followed on all its projects. That same day, but several hours later at 2:14 p.m., Washington First International Bank (“Washington First”) recorded a deed of trust against the property in the amount of $1,540,000. The sequence of when Shelcon began marking boundaries and when the deed of trust was recorded would later dictate the result of this case.

Approximately two years later on June 20, 2008, Shelcon recorded a mechanic’s lien in the amount of $303,291.29. By then Haymond was behind on payments and in need of additional financing. He had begun negotiations with Anchor Bank, but when the Shelcon lien clouded title, Anchor Bank required that the lien be released as a condition of financing. On July 16, 2008, a fully-executed lien release was recorded, stating in part that “THE UNDERSIGNED LIEN CLAIMANT hereby releases the lien on the property owned or reputedly owned by....” The release, however, contained “no language addressing whether Haymond had paid Shelcon or whether the lien release was limited or conditional in any way.”

After the release had been recorded, Haymond advised Anchor Bank that the lien was a misunderstanding and falsely claimed that the amount owed was for an unrelated project. Anchor accepted this explanation without securing any confirmation from Shelcon. Shelcon, meanwhile, was unaware of Haymond’s misrepresentation.

Haymond then submitted several invoices to Anchor Bank, which were approved by Anchor Bank after it had inspected the project. But, Anchor Bank never communicated with Shelcon during this due diligence period – not even to secure a priority agreement. Ultimately, Anchor Bank relied primarily upon the lien release in approving and processing a loan to Haymond. Anchor Bank recorded its deed of trust on August 22, 2008.

In the fall of 2008, Haymond and Shelcon agreed to modify their agreement. A written contract was circulated, which included new payment provisions changing the contract to a cost-plus-fee arrangement, a standard merger clause, and a provision for 18 percent interest on all unpaid amounts.

Neither party signed the contract. Nonetheless, Shelcon began billing on a cost-plus-fee basis and Haymond paid the invoiced amount. Shelcon continued to work on the project until February 2009 and two months later recorded a second lien. Notably, the second lien included amounts owed under the first lien, which has been purportedly released.1


A. The Lien Release Did Not Constitute a Complete Waiver of Lien Rights, Even Though the Release Was Never Conditioned on Payment.

The trial Court found that Shelcon’s first lien release “did not affect the amount for which Shelcon could subsequently lien after it had finished its work ...” Anchor Bank on appeal essentially conceded that Shelcon never executed a subordination agreement, a waiver or any document (other than the lien release) purporting to limit Shelcon’s lien rights. Anchor Bank mainly focused its efforts on arguing that, as a matter of law, the first release Shelcon signed precluded Shelcon from later liening for the (purportedly) already-released amounts.

The Court of Appeals, however, disagreed. Noting that there was no case law directly on point, the Court drew analogies to other cases discussing lien releases – cases some might find highly distinguishable. Ultimately, the Court’s decision hinged on a “liberal” reading of the mechanic’s lien statute and the fact the contractor had never been paid for the amounts intended to be released. This finding may cause lenders and owners to raise an eyebrow, because the lien itself never stated that the release was conditioned on payment. Title companies and others in the industry have relied upon lien releases of similar ilk in the past when removing clouds on title. Moving forward they may not.

B. The Lender Was Not Entitled to Rely Solely Upon the Lien Release.

As a secondary argument employed to defeat the contractor’s lien priority, the bank claimed that Shelcon should be prevented from recapturing the earlier, released amounts under the legal doctrine of equitable estoppel. For purposes of argument, the Court assumed Anchor Bank could meet all the requisite elements of the doctrine, except reasonable reliance. To invoke the doctrine, the Court held that Anchor Bank was required to prove that it had acted reasonably in relying on the release. The Court, however, found quite the opposite: that Anchor Bank’s reliance was not reasonable. This conclusion rested on the finding that “Anchor Bank had the means to discover the true facts [that Shelcon had not been paid to date], but it failed to do so.” The Court expressly adopted Shelcon’s argument that “Anchor Bank’s reliance was unreasonable in part because it failed to inquire of Shelcon.” While not discussed in the opinion, perhaps the bank felt it didn’t need to consult with Shelcon because it had already secured a lien release. It would now seem that releases alone are insufficient, depending on their wording.

C. A Contractor's Lien Attaches the Day it Begins Marking Boundary Lines.

Those in the industry know that a contractor’s lien generally (there are exceptions) attaches the first day labor, materials, equipment or professional services are first furnished to the site. In order for the lien to attach, however, the furnished items must be done for the “improvement of real property.” As a consequence, disputes have arisen over what type of work triggers attachment of a lien. For instance, drilling test pits has been found to be insufficient to allow a lien to attach because such tests do not constitute an “improvement” of the land.

From this murky legal precedent, the Court determined that marking boundaries fits the definition of professional services, as it is preparatory work in advance of “construction work.” In further support of this finding, the Court noted that the Shelcon’s boundary marking occurred just days before the construction work began. Because Shelcon’s first day of work occurred before both deeds of trust were recorded, Shelcon’s lien had seniority.

The Court awarded legal fees and costs in favor of the contractor. This award was not only against the owner under an attorney-fee clause in the contract, but also against the bank under the mechanic’s lien statute.2


The upshot of Shelcon is owners and lenders should consider updating their lien release forms, requiring priority agreements from contractors (most do already), and securing written representations from contractors confirming receipt of payment in full satisfaction of work performed (while careful to not make representations to the contractor). Whatever mechanisms are used, seeking further assurances that a contractor has been paid and that its lien rights have been waived seems prudent before relying upon a recorded lien release, in light of this unique case.

This publication is for informational purposes only and does not contain or convey legal advice.

Colm Nelson is a member (partner) at Foster Pepper PLLC and focuses his practice primarily on construction and real estate matters. He can be reached at or 206.447.6470.


1. This article focuses on the lien priority issues discussed in the opinion, and does not discuss the Court’s findings regarding contract ratification by partial performance.
2. While not squarely addressed by the Court of Appeals (because the matter was moot), it is interesting to note that the trial court ruled that the Anchor Bank deed of trust stepped into the shoes of the Washington First deed of trust for priority purposes, under the doctrine of equitable subrogation. Without getting into the complexities of that doctrine, whether it applies when a mechanic’s lien is involved has not (to the author’s knowledge) been addressed by any appellate court in Washington. Other states have not applied the doctrine uniformly when mechanic’s liens are involved, meaning practitioners should monitor application of the doctrine in Washington.

Dirty Deeds Done Dirt Cheap

Construction in the Seattle area is booming.  The old buildings go down, in come the excavators, and the cranes go up.  Most of the Owners of these new commercial and residential projects, from small apartment complexes to massive mixed use towers with hotels, offices and restaurants, will have to work closely with their designers and contractors to employ due diligence to avoid dirty deeds, such as the potential high cost of delay and property damage involving soil related claims.

Soils claims can be extremely expensive to resolve (like the SR 99 project), especially the ones that are not discovered until after substantial completion where the cost to correct the problem may be huge.  It’s no secret these claims can be budget busters and many times these claims may not be covered by the average general liability insurance policy.

To avoid this scenario, here are at least seven steps (there can be many more) you should take, to ensure you will have the information you need to successfully prevail in the average soils related claim dispute.

  1. Retain a competent, experienced, geotechnical expert.  You should not accept the geotech’s contract.  Have a good construction lawyer draft one for you that protects you and your project.  Do not ever allow that geotech to limit his or her liability to their fee. 
  2. Make sure your geotechnical expert has the correct insurance in place.  Demand to see a copy of the professional and general liability policies before you contract with them.  If either of the geotech’s policies will expire before the scope of their services is complete, make sure you get a copy of the applicable policies.  Make sure that the policies do not contain a large self-retention.  If you do not fully understand the language in these policies, please call your insurance coverage lawyer.
  3. Once under contract, make sure your geotech does the testing required to determine whether or not you have any problematic soil conditions under the extended foot print of the project.  Have your geotech timely provide all the information required by the jurisdiction and or your lenders if required
  4. Retain a competent engineer to design soil nailing for temporary walls and to inspect for full compaction of loose soils, protector testing and inspection of any other areas where it appears there has been past evidence of soil movement.  Your engineer should be up to speed on the codes and standards in your jurisdiction.
  5. Despite all of your due diligence, you should be prepared for differing site conditions.  The Seattle area has been built and rebuilt, over decades.  The list of things you can expect to encounter includes uncompacted soils, cobbles, boulders, standing ground water, aquifers, sinkholes, contaminates, Native American remains, sand, and others.  The detailed written contract (AIA 102 and 201) with your general contractor should have addressed all the liability presented by these issues.
  6. Make sure your general contractor, and/or the applicable subcontractors, are involved with issues with temporary and permanent slope stability, pilings, excavation, soils, grading, trenching, and other dirt work.  Again, you must have detailed, explicit contractual language to assess and allocate liability to each of the parties to the project who have contributed to a soils claim.  Be aware that many general liability policies have exclusions for soil issues like subsidence.
  7. Finally, as soon as a soil issue arises, fully document it in detail, describe what soil related issues have occurred and provide written notices of claim to any party who may have culpability.  Also send written notices to the related insurers, the Owner’s general liability policy, the Contractors, the subcontractors and design professionals.  Depending on the size and cost of the claim, you should also provide notice to the lender.  Do not be tempted to just keep working to maintain the schedule and avoid delay.  Do the investigation and document the claim details when the facts are fresh.  Look to see how the contract addresses delay, either by liquidated damages or the actual cost of delay.  If the latter, then make sure to retain a good delay claim expert.

It is the responsible thing to do!

Materials Available: "How to Pick the Right Contractor for Your Construction Project" Webinar

On April 2, 2015 Foster Pepper attorney Greg Guedel presented a webinar titled “How to Pick the Right Contractor for Your Construction Project.” The webinar was the second in an ongoing series focusing on pertinent construction topics. Greg provided universal techniques for members of both the public and private sector to pick a contractor. He outlined the responsibilities a contractor should possess, the information contractor bidders should provide, the responsibilities of the subcontractors and warning signs from contractors, including debarment and lawsuits. 

If you missed the presentation, you can review the materials or listen to a recording of the webinar here. To find materials from other presentations on construction topics, click here and scroll to the bottom of the page. The next webinar in the series will be hosted in June 2015 – look for an invitation in May.   

Upcoming Webinar: How to Pick the Right Contractor for Your Construction Project

Join us for the second of our ongoing, complimentary webinars focusing on pertinent construction topics and updates. This webinar, presented by Foster Pepper attorney Greg Guedel, is titled “How to Pick the Right Contractor for Your Construction Project.”

Greg will take questions from the audience following the presentation. If you have a question you would like addressed, please email Price Herriage-Wilson at by Friday, March 27, 2015.

To see the materials or listen to a recording of Greg’s last webinar “How Long Can a Construction Claim Last?” click here.

CLE (attorney) credits pending.
Certificate of completion available for other organizations. 

Thursday, April 2, 2015
2:00 – 2:30 p.m. 

Greg Guedel, Foster Pepper PLLC 

Please RSVP to by Friday, March 27, 2015. 

Materials Available: "How Long Can a Construction Claim Last?" Webinar

On February 19, 2015 Foster Pepper attorney Greg Guedel presented a webinar titled "How Long Can a Construction Claim Last?" The webinar was the first in an ongoing series focusing on pertinent construction topics. Greg provided updated guidance on the statute of limitations for construction claims and discussed critical dates and events, specifically substantial completion and termination of services, which determine whether a claim on a construction project has expired under Washington state law. Greg used the case Dania, Inc. v. Skanska USA Building, Inc. to illustrate the complexities of filing a construction claim. 

If you missed the presentation, you can review the materials or listen to a recording of the webinar here. To find materials from other presentations on construction topics, click here and scroll to the bottom of the page. Greg's next webinar is on April 2, 2015 at 2:00 p.m. and is titled "How to Pick the Right Contractor for Your Construction Project." 

Upcoming Webinar: How Long Can a Construction Claim Last?

Join us for the first of our ongoing, complimentary webinars focusing on pertinent construction topics and updates. This webinar, presented by Foster Pepper attorney Greg Guedel, will provide updated guidance on the statute of limitations for construction contract claims. Greg will also discuss the critical dates and events that determine whether a claim on a construction project has expired under Washington state law.

Greg will also take questions from the audience following the presentation. If you have a question you would like addressed, please email Price Herriage-Wilson at by Friday, February 13, 2015.

CLE (attorney) credits pending.
Certificate of completion available for other organizations.

Thursday, February 19, 2015
2:00 – 2:30 p.m.

Greg Guedel, Foster Pepper PLLC

Please RSVP to by Friday, February 13, 2015.


Construction Project Schedule and Delay Claims Seminar, 11/21/2014 in Seattle

On Friday, November 21, 2014 at the Hilton Seattle, Foster Pepper is hosting a program featuring a diverse group of top Construction Law Professionals who practice in and understand the unique issues of construction project schedule and delay claims. This seminar will address topics including CPM concepts, delay analysis, schedule disruption, impact costs, and acceleration claims. The program agenda is as follows:

9:00 Introduction and Overview
W. Gregory Guedel, Program Co-Chair
Foster Pepper PLLC
Daniel G. Quackenbush, PA, Program Co-Chair
Quackenbush & Associates, Inc.

9:10 30 Minutes to CPM Proficiency
Activities & Relationships; Forward Pass; Backward Pass; Float; Critical Path; Impacts and a Quick Simplified Demonstration of How TIAs Are Impacted in a CPM Schedule
Daniel G. Quackenbush, PA
Quackenbush & Associates, Inc.

9:40 Basic Scheduling Concepts for Delay, Acceleration and Mitigation
Project Delay; Internal Delay; Acceleration; Mitigation; Disruption; Impact and Lost Productivity; Frustrated Early Completion; 8 Common Schedule Analysis Techniques - The Procedures and Assumptions Built into Each Technique
Daniel G. Quackenbush, PA
Quackenbush & Associates, Inc.

10:00 Primary Legal Concepts for Delay Claims
Contract Terms; Notice Provisions; The Spearin Doctrine; Excusable and In-Excusable Delays; Compensable and Non-Compensable Delays; No Damage for Delay Clauses; Limited Damages for Delay Clauses; Claim Presentation Provisions; Apportioning Delays; Concurrent Delays; Directed and Constructive Acceleration; Legal Burdens and Standards of Proof
Gregory A.V. Clark
Foster Pepper PLLC

10:45 Break

11:00 Cost Analysis for Schedule and Delay Claims
Analyzing Delay and Acceleration Damages; Calculating Home Office Overhead and Jobsite Overhead Daily Rates; Cost Audits Related to Delay Claims
Megan S. Wells
Director of Global Construction Practice
Navigant Consulting, Inc.

11:45 Midday Break

1:00 Addressing Project Delays – Public Sector Perspective
Project Schedule Planning; Implementing Contract Provisions to Address Delay; Mechanisms for Resolving Delay Disputes in Traditional and Alternative Public Works Contracts
Mary DeVuono Englund
Senior Deputy Prosecuting Attorney
King County Office of the Prosecuting Attorney

1:45 Contracting Strategies for Schedule Issues
Key Terms and Concepts for Construction Contracts to Prepare for, Account for, and Allocate the Risks of Potential Completion Delays
Karin L. Nyrop, Senior Counsel
UW Division of WA State Attorney General’s Office

2:30 Break

2:45 Interesting Projects and Lessons Learned
Strategies for Managing Project Delays
W. Gregory Guedel, Moderator
Foster Pepper PLLC
Karin L. Nyrop, Senior Counsel
UW Division of WA State Attorney General’s Office
Daniel G. Quackenbush, PA
Quackenbush & Associates, Inc.
Christie True
King County Department of Natural Resources and Parks

4:00 Dispute Resolution and Arbitration of Schedule & Delay Claims
Adjudicating Schedule & Delay Claims – View from the Decision Makers; What Actually Works When Trying to Persuade the Decision Maker; Dos and Don’ts in Presenting Claims; What an Arbitrator or DRB is Looking for in Assessing Claims
Christopher J. Soelling
Christopher J. Soelling PLLC

5:00 Adjourn

More information about the program and registration may be accessed HERE.


Insurers Can Be Liable For Damages Even In The Absence Of Coverage

The U.S. District Court for the Western District of Washington recently issued an important decision confirming that insurers can be held liable for damages even in the absence of coverage.  This decision underscores the importance of: (1) making sure insurers make proper coverage determinations; and (2) making sure insurers make coverage determinations in a timely, proper manner.  While the decision addressed coverage under a commercial general liability policy, the insurer’s duty to make proper coverage determinations in a timely, proper manner applies to every type of insurance: commercial general liability, builder’s risk, professional liability, property, title, and homeowners alike.

In City of Bothell v. Berkley, the insurer issued a commercial general liability policy to a general contractor that was hired to build a new driveway for a church located in the City of Bothell.  The City was to be named as an additional insured under that insurance policy. 

In July 2011, a bicycle accident occurred after the contractor failed to slope the driveway properly.  The injured individual made a claim against the City.  The City tendered the claim to the insurer, but the insurer denied coverage by claiming that the insurance policy only covered accidents that occurred during ongoing operations and that the accident occurred after the contractor’s operations were completed.  Two years later, when the injured individual filed suit, the City re-tendered the claim to the insurer, but the insurer failed to respond.  A month later, the City sent a follow-up letter to the insurer, but the insurer again failed to respond.  The City sent a second follow-up letter to the insurer, and the insurer finally responded, but denied coverage for the same reason the insurer initially denied coverage.  The insurer later asserted two additional reasons for denying coverage: (1) because there was no written agreement signed by the contractor requiring that the City be named as an additional insured; and (2) because the injured party was using the driveway for its intended use.

The City filed suit against the insurer for breach of contract and bad faith.  The Court quickly dismissed the insurer’s first two reasons for denying coverage because: (1) the lawsuit did not allege that the accident occurred after the contractor’s operations were completed; and (2) the contractor and the City had a written agreement requiring that the City be named as an additional insured.  However, the Court concluded that the insurer ultimately had no duty to defend the City because: (1) the insurance policy excluded coverage for injuries that occur after the portion of the work giving rise to the injury has been put to its intended use; and (2) the lawsuit alleged that the driveway had been put to its intended use at the time of the accident.

Even though the insurer ultimately asserted a legitimate basis for denying coverage, the insurer’s conduct was not without repercussion.  Notably, the Court held that the insurer acted in bad faith by failing to timely respond to the City’s communications, by misrepresenting requirements under the insurance policy, and by asserting serial justifications for denying coverage without adequate investigation and/or in contravention of Washington insurance law.  Similarly, the Court held that the insurer’s actions (and inactions) violated the Insurance Fair Conduct Act and Consumer Protection Act (which subjected the insurer to treble damages).

Jay Donovan is a member of Foster Pepper who focuses on representing policyholders (including general contractors, retailers, homeowners, transportation providers, and non-profits) in their pursuit of insurance coverage for a variety of claims (including claims for construction defects, title defects, property damage, and intellectual property claims). 


7 Big Mistakes To Avoid In Residential Construction


1. Being Too Casual About Jobsite Safety

Even the most Responsible Developer knows that the odds are high that their company will experience a jobsite injury.  In Washington, it can be an emotional and costly experience.  You, as the general contractor, are ultimately charged with responsibility for jobsite safety.  You need to draft and maintain a comprehensive written safety program, enforce and fully document it, and fine or terminate workers who violate it.  Also, be sure to keep good records and make sure your premiums are paid.        

2. Use of Impractical Building Design and LOLs

Avoid eye-catching but problematic designs like steep roofs, small roof overhangs, high ceilings, stucco exteriors, west or south facing window walls, enclosed decks and porches that will be difficult to build and incredibly expensive to maintain.  In for sale projects, expect that many of your buyers will simply not maintain their homes, or will make an attempt, but will perform it poorly.  Later, when that bad design causes property damage or injury, you will be blamed, not your designer.  Best practice is to work with your designers on trouble shooting designs with the goal of agreeing on practical and enduring designs that require minimal maintenance.  Also, do not execute a contract with a designer who insists on limiting their liability to their fee.  Negotiate a more realistic agreement based on the risks posed for that particular project.         

3. New and To-Good-To-Be-True Building Products

If some new building product touts itself as saving you a ridiculous amount time, labor, or money, be suspicious.  Vet it with your peers and designers first.  Refuse to be some product manufacturer’s test subject.  Products that work in the Southwest and Southeast may not perform it the windy and rainy areas of Western Washington.  You veteran builders will recall the numerous product claims against cladding manufacturers, Simpson, Weyerhaeuser, CertainTeed, Louisiana Pacific, Georgia Pacific, Dryvit, Sto, etc.   

4. Workmanship Defects

Someone very wise said “it takes longer to be better.”  That wise person could have been a really good, reliable subcontractor.  That is the type of sub you should be contracting with.  Your nightmare is the sub that was scheduled to be onsite for three weeks, but completed its work in only ten days, including the weekend when your super was not present.  No one can produce quality work when working too fast.  You also cannot expect the city or county building inspector to do any in-depth level of inspection of that subcontractor’s work, because most jurisdictions do not have the staffing to do that, and they are likely immune from liability.  Here are some examples of defective workmanship we’ve run into recently which demonstrates this point: 

  • Roofing fasteners under driven and nowhere in the vicinity of the manufacturer’s installation instructions, which resulted in significant shingle blow off on 20, 2 story buildings;
  • Sticky flashings reversed lapped at wall penetrations in an entire subdivision;
  • An expensive rain-screen siding system where only 30% of the battens were actually nailed into the wall studs.  One-hundred percent of siding had to be removed, all for lack of due diligence and refusal to use a $10.00 stud finder to snap nailing lines.  This occurred in four different multifamily projects with first-class design oversight of the subcontractor’s work in progress.  

5. Outdated Contracts

Your purchase and sale and lease agreements, subcontracts, and supplier-purchase-order contracts should be well worded in order to mitigate your liability.  Like building designs, construction materials, methods and products, the law regarding residential construction liability also evolves. So every 2-3 years, make sure you gather your existing contracts and get them updated to conform to ever-changing Washington law, which often favors buyers and tenants.      

6. Insurance

A good insurance policy can be your safety net, your ace in the hole, and your get-out-of-jail-free card - if you did not go cheap.  Before you purchase insurance, meet with a good risk manager or broker who knows the residential insurance market.  Put the same emphasis on this purchase as you would for new, high-quality tools, equipment, and vehicles.  Buy the best because you want it to perform when you really need it to.

7. Insurance Companies and Claims

The nice person from the insurance brokerage that placed that policy for you with Lloyds of Hackensack Contractors Indemnity Company may not be there for you when you have a claim.  A claims adjuster will be assigned to your claim, but a primary goal of adjuster is to find a way to deny your claim, in whole or in part, to save her company money.  The adjuster knows way more about her industry and that policy than you do, and if you take her on alone you have little or no hope of prevailing.  Instead, you will have to hire someone that knows the law and is fluent in “Insurance-ese.”  Yes, in a major claim, you face a choice of two evils, but if you actually expect to get a reasonable sum of money from your insurer, you will have to bite the bullet on this.

In sum, the author hopes you will never actually have to experience any of these problematic building and construction issues.  But, like your parents probably told you, hope for the best, but always be prepared for the worst.  If most builders embraced this philosophy, claims would be rare and claims adjusters and lawyers would be underemployed.