Will Your Liability Cover You?

I went to a house for the third time this week. It was a brand-new house with cupped floors. The first visit was to identify the cause. The second visit was to meet with the homeowner, builder and insulation contractor. The third visit was to check the status of the floor and repair work, and meet with the repair flooring people. I was actually surprised at how nice the floor looked after we got all the moisture issues under control.

The builder's attitude the whole time was that he built the house to code requirements. I, of course, offered to help him advertise that he builds the worst house he can legally build. I did use a little more finesse in my wording, but that was the gist of my point. This was not a 1,000-square-foot tract house. It was an upscale 6,000-square-foot house. I believe that the owners expected a little better than a code house.

The builder has filed with his insurance company, but they won't help because liability insurance doesn't cover poor workmanship. We had a recent state supreme court ruling that better defined what contractor's liability insurance covers and what it doesn't. One of the factors is that contractor's liability insurance covers unexpected events. If I read the ruling right, the results of poor workmanship are expected, not unexpected, so they are not covered. In addition, coverage applies to damage caused to other people's property. If you install the floor, the floor is your property, not someone else's. I am not an attorney or insurance rep. But my question this week is: What kind of insurance do you have, and will it protect you from poor workmanship issues?