Blueprint for disaster: Construction liability cases

It may all seem inconsequential at first: a crack on the floor, a burst water pipe, a loose bolt. However, in an industry that can be considered complex and highly dangerous such as the construction industry, those minor details can quickly pile up and turn into costly lawsuits.

To say that there is a wide range of risks associated with the construction industry is an understatement. Because of the nature of the job, the involvement of dozens or even hundreds of workers operating various equipment, and unforeseen threats such as the weather, the possibility of damages, injuries, and even deaths remain high.

According to the Bureau of Labor Statistics, fatal work injuries from falls, slips, or trips continued a general upward trend that began in 2011, affecting roofers, carpenters, and heavy and tractor-trailer truck drivers in particular.

However, workplace injuries and deaths are just one part of the picture – other potential claims can stem from fires, explosions, defective materials, breach of contract, and negligence, to name a few.

In April 2017, a whopping $3.8 billion was shouldered by a global construction company and a petrochemical firm after pleading guilty of bribery in order to resolve charges with authorities in the United States, Brazil and Switzerland. The settlement arose out of their schemes to pay hundreds of millions of dollars in bribes to government officials around the world. The contractor admitted to unparalleled bribery and bid-rigging scheme for more than a decade.

In another notable case, manufacturers as well as home builders, developers, installers, realtors, brokers, suppliers, importers, exporters, and distributors had to shell out $1 billion to settle multiple lawsuits brought about by property owners whose homes or other properties were damaged by Chinese Drywall.  More than 10,000 filed suits alleged that the defective drywall corroded electrical wiring and copper piping in homes because of the emission of sulfur dioxide and hydrogen sulfide. The defective drywall also led to health problems of many homeowners.

Additionally, a lawsuit was brought by a local utility against two contractors for a 198,000-acre fire that destroyed more than 1,300 homes, killed two people, and caused massive evacuations.  Losses incurred for this liability was a whopping $370 million.

Multi-million settlements such as these are among the 13 notable construction losses tracked by Advisen in its loss database. In its recent white paper, Advisen highlights that in the absence of coverage, construction firms may become exposed to expensive lawsuits, high indemnity awards or complex settlements that may result from these claims.

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