Contracting to build a new home can be an exciting endeavor, but often in that excitement important details, including the protection of adequate liability insurance, can get glossed over or even forgotten about. Whether you are a homeowner or builder, you may think that a typical commercial general liability insurance policy held by the builder is all you need; however, such an assumption could be a grave error.
The typical commercial general liability insurance policy covers damages for negligence, but contains a plethora of exclusions designed specifically to preclude the carrier’s liability for construction-related damage, including damage to the insured’s “own work,” which, in the case of a general contractor, is the entire job. Other exclusions exist for damages involving “mold and fungus” (guess what happens to lumber when it stays wet?), and, critically, damages imposed by virtue of a contract.
This last exclusion for contract damage is especially important because if you have a contract with a general contractor, then North Carolina’s so-called “economic loss doctrine” prevents you from suing the general contractor for negligence. The net result? You will have no way to recover against the insurance company, and you’ll be forced to pursue the contractor for damages.
And if that contractor happens to have little-to-no assets and/or goes belly-up and files for bankruptcy, you could be left with no way to recover for your loss. Or, if you’re the general contractor, you might be surprised to eventually learn that the very contract you and the owner signed basically voided your own insurance coverage! Legally speaking, there are many more ways that a new build or large-scale renovation could go wrong. At Asheville Legal, we have the knowledge, tools, and experience to help you anticipate and avoid these kinds of problems. Alternatively, if you’re facing some catastrophic loss in connection with a construction project, we have the fortitude and expertise to help you make the best recovery possible.