Claim Scenarios
These claim scenarios provide insight into instances where a claim may occur and the lessons learned
Dedicated Claim Support
If an alleged error or omission occurs, a contractor or owner could become entangled in a dispute or litigation that can be costly in terms of time, money and loss of reputation. Our dedicated and experienced claim professionals will help our policyholders manage the issues and concerns so that they can focus on their business. With Professional Liability insurance from Berkley Construction Professional, your clients can rest assured that they’ll be supported when they need it most!
Polluted by Subcontractor Failure
A construction manager (CM) hired and supervised a specialty subcontractor on a nursing home project. Mold was discovered due to a subcontractor’s error in applying fireproofing and failure to provide proper ventilation. Berkley Construction Professional paid more than $700,000 to remediate the mold condition through the mitigation coverage offered by our policy, in addition to the nearly $50,000 in legal expenses. We pursued subrogation against the responsible subcontractor. The subcontractor did not have pollution insurance required in its subcontract with the CM. Therefore, recovery was limited to $120,000.
Leaky Cell Tower
A construction manager (CM) was hired by a wireless service provider to install a cell tower on the roof of a hotel. During a severe rain event, the roof leaked causing significant damage to the occupied areas of the hotel. While the contractor covered the roof with a tarp it was not sufficiently applied or secured to prevent water damage and microbial contamination. The plaintiff’s initial demand was $1.8 million, but through mediation, a settlement of $610,000 was reached. Berkley Construction Professional paid $340,000 on behalf of our policyholder, the CM and $145,000 in legal expenses.
HVAC Value Engineering Gone Wrong
A general contractor (GC) allowed its HVAC subcontractor to propose an alternative approach to the HVAC design of a residential facility incorporating value engineering (VE). The mechanical engineer reviewed the submittal for the VE proposal and requested additional information prior to making a judgment on the submittal. Additional information was not provided and the HVAC system was installed without the mechanical engineer’s approval. When the system failed to provide adequate airflow per state requirements, the owner demanded that the insured and/or the subcontractor repair or replace the system. The initial cost of the repair was estimated at $1 million, but an alternate solution was agreed upon for a cost of $450,000. The HVAC subcontractor paid $300,000. Berkley Construction Professional paid $150,000 on behalf of the GC our policyholder, which included their $50,000 deductible.
Moisture and Mold Infiltrate Apartment Project
A design-builder’s apartment project developed mold after several winter storms. The incomplete roofing membrane allowed melting snow and rain to seep into the building, causing mold growth.
Initial estimates to address the mold were about $180,000. However, after further investigation, mold growth was discovered throughout most of the building and remediation costs surpassed $400,000. Berkley Construction Professional hired a specialist team to review the mold remediation activities under mitigation coverage and collaborated with the policyholder to determine the reasonable and necessary costs to mitigate the mold.
Berkley Construction Professional paid $400,000 on behalf of the policyholder and $20,000 in legal and investigation fees. The policyholder paid the $50,000 Self-Insured Retention.
Communication Breakdown Causes Chlorine-Polluted Stream
A contractor’s project involved the negligent discharge of highly chlorinated water into a neighboring property owner’s stream, killing plants and aquatic life. The contractor was hired by the city to construct a water main and failed to properly manage the water pipe disinfection process, which allowed the chlorinated water to escape. The state’s environmental agency fined the project owner several thousand dollars and mandated environmental testing. The neighboring property owner initially demanded over $100,000 for damage to the stream on his property. The case was ultimately settled for over $50,000, which the contractor paid as it was within its Self-Insured Retention (SIR). Berkley Construction Professional coordinated payment of the fine, retained defense counsel and environmental and aquatic experts to assess the damage and ensured transparency by involving the neighboring property owner in the environmental testing process.
