Ed Martinet, of LiMa Solutions, wrote an excellent article in the December issue of Construction Executive Magazine on his approach to resolving construction defect claims.
The amount of resources and capital spent on managing and mediating construction defect claims is staggering. In fact, the cost to litigate commonly exceeds the settlement value of today’s larger claims. The Building Industry Association estimates these costs may exceed indemnity costs by as much as five to one. Recent carrier interviews confirm payouts of four to seven times more for defense costs.
A typical construction defect claim takes two to three years on average to settle. As the fight over scarce resources (funding and personnel) continues to intensify, resolution of complex construction defect cases is more difficult to achieve than ever. Insurance coverage is becoming tougher to secure, litigation costs are soaring, significant self-insured retentions are common and many states have weakened indemnity statutes— creating a difficult environment for any party to settle or win.