If you have been asked to investigate or remediate an alleged construction defect claim, WAIT! Until you have consulted your broker

A Florida Court held that a developer’s OCIP did not cover nearly 40% of the $1,000,000 spent by the project’s drywall sub-contractor in investigating and remediating an allegedly faulty drywall installation, because the sub-contractor acted before legally required.

Key Takeaways:
  1. Do not begin to remediate or fix an alleged or actual construction defect without first consulting your broker and legal counsel.
  2. If you are a sub-contractor covered by an OCIP, pay very careful attention not only to the verbiage of the primary policy but how applicable law defines the verbiage.

Peninsula II Developers, Inc. v. Westchester Fire Insurance Company, 2018 U.S. Dist. LEXIS 69481 (S.D. Fla. April 25, 2018) (California law) is a reminder to consult with your broker and/or counsel before addressing an alleged or actual construction defect.  In connection with the allegedly defective installation of drywall at a 223-unit condominium complex in Florida, the Court held that an excess policy within the developer’s OCIP did not cover $381,490.04 of $1 million spent by a drywall sub-contractor to investigate and remediate the matter, because the excess policy followed form to the primary policy, and the primary policy covered “those sums that the insured becomes legally obligated to pay as damages,” which, under applicable law, was limited to “money ordered by a court.”