Common Reasons for Insurance Claim Against Builder

Common reasons for a general liability insurance claim against a builder are:

  1. Damage caused by the builder’s work, such as water damage or damage to other people’s property.
  2. Bodily injury to others resulting from the builder’s work.
  3. Stolen equipment and tools from the job site.
  4. Property damage caused by tree trimming or other hazardous work.
  5. Poor quality workmanship that does not meet the standards set in the contract.
  6. Delays or other problems caused by the builder.
  7. Unsatisfactory job performance that breaches the contract.
  8. Defective work that does not meet the required standards.
  9. Non-compliance with the designer’s or client’s instructions.
  10. Use of substandard materials contrary to the agreed-upon specifications.
  11. Failure to maintain proper tolerances for precision work.
  12. Engaging in collaborations with unqualified or unreliable third parties.

Before hiring a contractor or home builder, homeowners must check for past negligence by their preferred contractor.

In the event of a breach of contract, construction defects, fraud, negligence, or post-construction injury, it is essential to carefully review the contractor’s insurance policy and initiate the compensation process for any errors made by the builder or contract a construction negligence attorney.

By doing so, you can ensure that your rights are protected and that you receive the appropriate compensation for any damages resulting from the contractor’s mistakes.

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how to deal with construction issues and file a claim
how to deal with construction issues and file a claim

Both general and sub-contractors can become bad actors even if you hire the best one according to their reviews.

To deal with the construction problems a contractor may cause, homeowners should first document the issue, review contracts and insurance policies, then communicate their concerns clearly to the builder, consult an attorney if needed, file a claim with the builder’s insurance company, consider mediation or arbitration and keep records of all related interactions.

Nothing in this article substitutes legal advice and can’t be taken seriously. The text provided in this post is for informational purpose and from our own experience.

13 steps homeowners with construction issues should take before a formal builder insurance claims

When faced with any of the 13 common reasons to file a claim against a bad builder, take the following steps:

  1. Act quickly: In many cases, there is a statute of limitations for filing a claim or, in the worst case – a lawsuit against a builder. Consult with an attorney to determine the deadline for filing a claim in your local city or region.
  2. Document the issue with photos, videos, and written descriptions.
  3. Review the construction contract and insurance policy to understand your rights and coverage.
  4. Communicate your concerns about shoddy work with the builder and attempt to resolve the issue amicably.
  5. If necessary, consult a lawyer with experience in construction disputes.
  6. Collect evidence, such as expert opinions and cost estimates for repairs in a snagging list.
  7. File a formal warning letter to a contractor, including all relevant documentation.
  8. Consider mediation or arbitration as alternatives to litigation.
  9. Monitor the progress of your claim and maintain communication with the insurance company.
  10. If the claim is denied, consult your lawyer to explore filing a lawsuit.
  11. Keep records of all correspondence and interactions related to the issue.
  12. If the dispute escalates, be prepared to present your case in court or during arbitration.
  13. Seek professional advice on how to prevent similar issues in future construction projects.

A warning letter to a contractor is a document that informs a contractor that they are violating safety procedures or not fulfilling the terms of their agreement.

The warning letter warns the contractor to let them know they must follow the safety guidelines or complete the work efficiently.

You may try to find a sample of warning letters on most construction negligence attorneys’ websites or your local citizen’s advice office.

The text in a warning letter should be written in simple language and communicate the point diplomatically yet assertively.

The builder should not get offended, but the message should be clear.

A warning letter should include the following information: 

  • The name and address of the contractor
  • The details of the violation or noncompliance
  • The consequences of not complying with the safety guidelines or not fulfilling the terms of the agreement
  • The deadline for the contractor to comply with the safety guidelines or complete the work
  • The letter should be professional, standardized, and adapted to unique scenarios.
when to take action against a negligent builder
when to take action against a negligent builder

The above was TLDR of the common reasons for insurance claims against the builder and what steps to take before you file one.

If you dealing with property damage caused by a construction error or negligence, you need to know that many aren’t unaware they can file an insurance claim directly against the builder.

This article will walk you through understanding such builder’s insurance claims, knowing when to take action, and navigating the often complicated filing process.

So let’s explore this avenue to restore your peace of mind and protect your investment in your dream home.

If neighbour's builder damages your property

If a builder hired by your neighbor or someone else damages your property during construction, it can be a challenging and stressful situation as the builder often claims this has not happened and is not their fault.

Follow these steps to address the situation and seek compensation:

1. Create a Record of the Damage

The first step is to document the damage as soon as you notice it. Use a camera to take high-resolution photos or videos showing the extent of the damage. Ensure these are time-stamped to create a clear record of when the damage occurred.

2. Inform Your Neighbour and Their Builder:

Arrange a meeting or write a letter to your neighbor and their builder explaining the situation. Use this opportunity to share the evidence gathered and the damage’s impact. Keep communication straightforward and precise to avoid disputes.

3. Request Rectification or Compensation:

In your communication, ask the builder or your neighbor to rectify the damage or pay for the repairs required. If they have insurance that covers such incidents, this might be the most straightforward solution to your issue.

4. Check Your Insurance Policy:

If your neighbor or their builder is unresponsive or disputes the claim, check your own homeowners’ insurance policy. It might provide coverage for damage caused in such scenarios.

5. Get a Professional Assessment

In case of disagreement over the extent of the damage or the repair cost, consider bringing in a neutral third party, like a certified inspector or an adjuster, to assess the damage.

6. Seek Legal Advice

If dialogues fail, it might be time to seek legal advice. A construction lawyer can guide you through the process, helping you understand your contractual rights and exploring options for compensation.

Understanding Insurance Claims Against Builders

understand what constitutes the insurance claims against your builder
understand what constitutes the insurance claims against your builder

An insurance claim against a builder is a legal process that property owners can undertake to seek compensation for damages or issues caused by the builder during construction.

  1. Property owners can file an insurance claim against the builder to seek compensation for damages or issues caused during or from their poor quality work.
  2. Circumstances that warrant a claim include structural failures, contract non-compliance, subpar workmanship, delays in construction, abandonment of projects, property damages, personal injury claims, and unforeseen expenses post-construction.
  3. Steps to filing an insurance claim include reviewing policy coverage
    1. Documenting damages or issues thoroughly with evidence like photographs and video in a snagging checklist.
    2. Promptly notifying the builder and insurance company when aware of potential claims
    3. Collecting necessary documentation and evidence to support the claim, and following the claims process outlined in the policy.
    4. Seek legal assistance if disputes or challenges arise.

Types of Insurance in the context of contractors and homeowners

important construction insurance types to know
important construction insurance types to know

There are several types of insurance policies that homeowners and contractors may need to consider to protect their property, employees, and projects. Here are some of the most common types of insurance policies for homeowners and contractors:

Types of Insurance for Contractors:

  • General Liability Insurance: The type of that insurance covers claims arising from damage a contractor causes to a third party.
  • Workers Compensation Insurance: The insurance covers the medical expenses, lost wages for employees who are injured on the job.
  • Builders’ Risk Insurance: This insurance covers property damage to a building under construction.
  • Errors & Omissions/Professional Liability Insurance: This type of insurance covers claims arising from contractors’ professional services.
  • Inland Marine Insurance: This covers tools, equipment, and materials that are in transit or stored off-site.
  • Commercial Auto Insurance: Type of insurance covers vehicles used for business purposes.

Types of Insurance for Homeowners:

  • Homeowner’s Insurance: This type covers damage to the home and personal property caused by covered perils, such as fire, theft, or weather-related events.
  • Liability Insurance: This insurance covers costs associated with third-party injuries or property damage caused by the homeowner.
  • Builder’s Risk Insurance: This type of insurance covers property damage to a building under construction.
  • Flood Insurance: This type of insurance covers damage caused by flooding.
  • Earthquake Insurance: This type of insurance covers damage caused by earthquakes.

Contractors and homeowners need to assess their specific needs and risks to determine which types of insurance policies are necessary for their business or property.

Definition of General Liability Insurance Claim Insurance against a Builder

A general liability insurance claim against a builder constitutes a formal request by an individual or entity to an insurance company seeking coverage or compensation for any damage caused during construction.

how does the general liability insurance work for a builder
how does the general liability insurance work for a builder

In particular, this claim is typically initiated under the purview of a Builder’s Risk Insurance policy. This policy aims to protect buildings that are being constructed or renovated and covers various types of damages ranging from property damage to additional soft costs related to the construction project.

The party initiating such a claim could either be someone who has suffered a loss due to builders’ negligence or potentially even by contractors themselves in response to claims laid against them.

Notably, court rulings have often highlighted the burden of proof required in these situations, emphasizing clear evidence and thorough documentation when establishing coverage in claims against builders’ risk insurance policies.

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Circumstances When a Claim against a Builder Can Be Made

understand when to claim against your contractor
understand when to claim against your contractor

It’s crucial to comprehend the various situations in which a claim against a builder’s insurance can be instigated.

These circumstances often revolve around issues that significantly impact your property’s structural integrity, safety, or function.

  • Circumstances When a Claim against a Builder Can Be Made

    1. Structural Failures: Serious structural problems arise due to poor construction techniques, substandard materials, or building code violations.
    2. Contract Non-Compliance: A claim can be lodged when the delivered project differs from the written contract.
    3. Inferior Workmanship: Claims can be made when a builder’s work fails to meet professional standards, resulting in defects or inadequate work.
    4. Construction Delays: Unjustifiable and prolonged delays leading to financial losses may warrant a claim.
    5. Project Abandonment: Claims can arise when builders leave projects unfinished, contrary to the agreement.
    6. Property Damage: Accidents during construction causing damage to properties may lead to a claim against the builder.
    7. Negligence: If the builder was negligent and caused damage to your neighbor’s property, you may be able to claim them. Negligence can include things like failing to take reasonable care, not following building codes, or not using appropriate materials.
    8. Contractual Obligations: If the builder had a contractual obligation to protect your neighbor’s property and failed to do so, you may be able to make a claim against them. For example, suppose the builder agreed to put up protective barriers to prevent damage to your neighbor’s property and failed to do so. In that case, they may be liable for any resulting damage.
    9. Personal Injury: Claims can be made against builders’ liability coverage when construction sites cause personal injuries.
    10. Unforeseen Post-Construction Expenses: If the builder’s insurance does not cover costs, it may be necessary to file a claim.
    11. Builder-Caused Damage: Claims can arise from water damage or damage to other people’s property caused by the builder’s work.
    12. Bodily Injury: Claims may be made for injuries to others resulting from the builder’s work.
    13. Stolen Equipment: Claims can arise when equipment and tools are stolen from the job site.
    14. Hazardous Work Damage: Property damage caused by tree trimming or other hazardous work may lead to a claim.
    15. Unsatisfactory Performance: Claims can be made when job performance breaches the contract.
    16. Defective Work: Claims may arise when work does not meet the required standards.
    17. Designer or Client Instruction Non-Compliance: Claims can be made when builders fail to follow instructions from designers or clients.
    18. Use of Substandard Materials: Claims may arise when builders use materials that do not meet the agreed-upon specifications.
    19. Tolerance Violations: Claims can be made when builders fail to maintain proper tolerances for precision work.
    20. Unreliable Third-Party Collaborations: Claims may arise when builders engage with unqualified or unreliable third parties.

I'm starting a construction project and hiring a builder, do I have to have builder's risk insurance?

what to do and how to protect your project from a construction negligence
what to do and how to protect your project from a construction negligence

If you have a financial interest in the construction project, you need the builder’s risk insurance because it provides comprehensive coverage during construction, which is not covered by homeowners insurance.

This type of insurance, also known as the “course of construction, ” protects the structure and related materials during construction.

It covers damage to a construction project caused by weather, fire, vandalism, or theft.

Generally, a builder’s risk policy covers a structure under construction and the materials used to build it, either on-site or in transit, which will become a permanent part of the structure.

You can pay for the builder’s risk insurance policy if you are the property owner.

If you are a contractor or subcontractor, you should invest in a builder’s risk insurance while building or renovating a structure.

It is optional for the homeowner to buy this coverage and add the builder to their policy as an additional insured party.

It is important to note that a builder’s risk insurance is a specialized policy, and each procedure is unique.

Therefore, it is essential to understand what your policy covers and does not cover. Thoroughly review your policy and consult with an insurance professional to ensure you have the appropriate coverage for your construction project.

Trading standards for builders

In the construction industry, trading standards for builders serve as vital guidelines that ensure quality workmanship and project completion in compliance with legal obligations.

These standards encompass aspects ranging from fair pricing to adherence to safe working conditions, thus protecting both parties involved – builder and client.

what guidelines are there for good workmanship on a construction project
what guidelines are there for good workmanship on a construction project

For instances involving poor workmanship or construction defects, pursuing an insurance claim against a builder becomes feasible. Clearly defined in the Builder’s Risk Coverage Form, this policy safeguards builders from financial losses derived from unforeseen damages during projects.

Not all events might be protectively wrapped within standard policies – floods, earthquakes, equipment breakdowns or testing failures of HVAC systems are noteworthy exclusions.

Hence it is crucial for good builders to critically appraise their insurance coverage and proactively equip themselves for potential litigations about insurance claims against them due to damages or defects.

Steps to Filing an Insurance Claim Against a Builder

most important steps to do before failing contractor insurance claim
most important steps to do before failing contractor insurance claim

Suppose you’ve tried all soft approaches and nothing yield a result, the builder won’t budge and resolve the problems. Then what’s left for you is to prepare your insurance claim and file the insurance claim.

To file an insurance claim against a builder, you need to review your policy, document the damages or issues, notify the builder and insurance company, collect evidence and necessary documentation, and follow the claims process.

Policy Review

If you are filing a claim against a builder, you must review your policy to determine what is covered and what is not. 

Notify your insurance carrier immediately as soon as you become aware of a potential construction insurance claim.

However, suppose you are filing a claim against the builder’s insurance policy.

In that case, you must contact your construction negligence attorney and follow the expert’s advice. You can help by asking the contractor for their insurance details, including the insurance policy number for their liability insurance and the amount they carry.

Make sure it meets or exceeds state limits. If in doubt, contact your local building department or consumer protection agency to double-check that the contractor is licensed.

Once your case information is diligently prepared and your snagging list is completed, contact their insurance company directly to file a claim against their liability insurance.

Documenting the Damages or Issues

When filing an insurance claim against a builder, one of the most crucial steps is appropriately documenting the damages or issues. This process involves thorough and detailed documentation of all the damages or destroyed property that needs to be covered by the claim.

Property owners should provide clear photographs, videos, or any other visual evidence to support their claim. It’s also essential to keep records of any communication with the builder and insurance company throughout the process.

By meticulously documenting the damages or issues, property owners can strengthen their case and increase their chances of a successful insurance claim against a builder for contractor damages.

If you have identified defects in your new build home, you must report them to your housebuilder. Obtaining a professional snagging report can enhance your claim, as the report will identify the defects with time-stamped photos.

Using a professional company to create your snagging report [UK] or Home inspections [US] is recommended, as they can help detect and identify issues that require rectification.

If the home builder does not address the items on the snagging list, you can seek assistance from a professional snagging company for your snagging survey.

Common Challenges in Insurance Claims Against Builders

builder insurance issues - denial of claims, insufficient coverage, wrong insurance, missed deadlines, disputes
builder insurance issues - denial of claims, insufficient coverage, wrong insurance, missed deadlines, disputes

Insurance claims against builders can be complex and challenging.

From denial of claims to insufficient coverage, delayed settlements, disputes over liability, and the need for legal assistance, property owners may face many obstacles when filing a claim against a builder’s insurance.

But understanding these challenges is crucial in navigating the claims process effectively.

Keep reading to learn more about overcoming these hurdles and ensuring you get the compensation you deserve.

Denial of Claims

In insurance claims against builders, one common challenge that homeowners may face is the denial of their claims. Builders’ liability insurance policies often include exclusions that insurers can use to deny coverage for construction defect claims.

This can leave homeowners feeling frustrated and uncertain about how to proceed. It’s important to understand that insurance companies will often try to minimize their payouts, so it’s crucial to carefully review your policy and consult with a construction lawyer who specializes in insurance disputes.

They can help you navigate the complex world of builder’s risk claims and ensure you receive the compensation you deserve for any damages or issues caused by the builder’s workmanship or negligence.

Insufficient Coverage

Insufficient coverage is one of the common challenges faced when filing an insurance claim against a builder. Contractors’ general liability policies can have various amendatory endorsements and exclusions, which could limit or exclude certain types of damages or claims.

As a construction lawyer, it’s important to carefully review the terms and conditions of these policies to understand their scope and ensure that your clients have adequate coverage. Failure to do so may result in facing obstacles during the claims process, potentially leaving your client without the financial protection they need.

Understanding the intricacies of contractors’ insurance coverage and seeking professional advice is crucial in order to navigate through potential difficulties and secure appropriate compensation for your clients in case of any damages or issues arising from construction projects.

Delayed Settlements

One of the most common challenges faced by individuals filing insurance claims against builders is delayed settlements. This can be incredibly frustrating and cause significant financial burdens for claimants.

Insurance companies may prolong the settlement process, causing unnecessary delays in receiving compensation for property damages or other covered losses.

In some cases, insurance companies might dispute liability or require additional documentation before approving a settlement. This can further complicate matters and result in prolonged negotiations between all parties involved.

It is essential to stay persistent and proactive throughout the claims process to minimize delays and ensure a timely resolution.

Recent court rulings have shed light on builders’ risk insurance claims, which can provide coverage for delay risks associated with covered events in construction projects(1). Understanding these rulings can help construction lawyers navigate their clients’ claims more effectively.

(1) AGC 2022 Surety Bonding and Construction Risk Management Conference; Author of the paper: Miles Holden is a partner at Hanson Bridgett LLP’s San Francisco office and is the firm’s Insurance Recovery Practice Leader.

Disputes Over Liability

what to do with contractor not finishing work on time
what to do with contractor not finishing work on time

Disputes over liability are a common challenge in insurance claims against builders. When construction defects occur, determining who is responsible for the damages can become a complex task.

This often leads to disputes between all parties involved, including the builder, subcontractors, suppliers, and even the owner. Lawsuits may arise as customers seek compensation for their damages.

Liability can extend to anyone involved in a construction project if a customer sues them for construction-related damages. It is crucial for construction lawyers to thoroughly analyze contracts and insurance policies to understand the responsibilities and potential liabilities of each party involved.

Legal Assistance for Insurance Disputes

If you find yourself amid an insurance dispute regarding a claim against a builder, it is essential to understand that seeking legal assistance can significantly benefit your case. Builders’ risk insurance claims can often be denied or undervalued by insurance companies, causing frustration and financial stress for those involved.

This is where the expertise of a construction lawyer comes into play. With their knowledge and experience in insurance litigation and construction projects, they can help navigate the complexities of your claim.

Florida-based insurance claims attorneys resolve disputes between policyholders and their insurance companies. They have a deep understanding of the relationships between parties involved in construction projects and the insured’s role throughout the process.

In addition, they are familiar with the project timeline and how various factors may impact an insurance claim.

By enlisting the services of a skilled construction lawyer, you gain access to someone who will fight for your rights and ensure that your claim is not dismissed or undervalued unjustly.

They will work diligently to collect evidence, assess damages or issues accurately, negotiate with the builder and the insurer on your behalf, and guide you through the claims process.


In conclusion, filing an insurance claim against a builder can be a complex process, but it is essential for property owners to protect their interests. Understanding the steps involved and being aware of potential challenges can help ensure a smoother claims process.

Seeking legal assistance when necessary can also provide valuable guidance and support. Remember, as a property owner, you have the right to hold builders accountable for damages and seek appropriate compensation.

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