Limitations of Construction Liability Insurance

When hiring a construction crew to renovate homes, it is critical to have the proper insurance coverage. For instance, liability insurance policies do not provide coverage for injuries or property damage caused by altering structures, new building construction, or demolition. If an individual wants coverage for these kinds of risks, they need a construction insurance policy. However, this type of coverage has its own restrictions as well.

One policyholder is learning this the hard way. He purchased a foreclosed home with the intent to perform extensive renovations. During a routine roof replacement, a piece of plywood injured a construction crew member. The crew member sued and the policyholder sought defense from his insurer. The policy included an exclusion for injuries caused by demolition. The insurer argued that because the policy does not provide coverage for injuries caused by demolition, the crew member’s original claim was null.

However, the definition of demolition cast doubt on this argument. The insurer argued that tearing down the roof to the original decking amounted to a demolition job. The court, however, maintained that roof removals do not constitute demolition. The fact that the home was under renovation and that the crew was repairing the roof shows the intent was not to demolish the structure. Furthermore, previous court cases define demolition as a complete tear down or destruction of a building. Because this was a renovation, the demolition injury exclusion did not apply.

The court also explained it fell on the insurer to show the exclusion met three requirements:

  • That the policy detailed the exclusion in distinct and unambiguous language
  • That the exclusion did not require additional interpretation
  • That the exclusion was applicable to the case at hand

The court maintained the insurer did not meet this burden. This particular case illuminates the intricacies of construction insurance policies. To learn more about the different types of construction insurance, contact us.

How to Improve Your Hiring Practices in 4 Steps

The best strategy for achieving company goals is to hire the right people. While this may seem like a simple concept, many managers take a very lax approach to interviewing job candidates. When management puts an emphasis on the hiring process, they get superior candidates. The attitude an interviewer adopts is often what sets exceptional companies apart from the so-so ones. The following suggestions can help companies fine-tune their hiring practices.

  1. Clearly define the job and expectations. Some managers write vague job descriptions on purpose, believing they know what they’re looking for in a job candidate. They assume they will recognize the best fit for the job when they see the individual. However, this results in a mixed bag of applicants. They will have vastly different skill sets that aren’t easy to compare against each other. Providing a clear description including desired skills, experience, and education will help reduce the number of unqualified applicants.
  2. Test top-tier candidates. People often stretch the truth on their resumes while some outright lie. The easiest way to see if the applicants have the desired skills is to test them. The tests can be simple, such as requesting that a potential web editor explain how he or she would turn a printed document into a suitable web page. This will identify which candidates have the skills needed to do the job and which don’t.
  3. Recruit other employees. Having one manager interview potential job candidates provides a very narrow scope. Several factors can cloud the interviewer’s opinion or they may not recognize certain shortcomings. Bringing in other employees, especially those that will work with the candidate often, can trigger new questions to reveal more about the applicants.
  4. Don’t neglect cultural fitness. When managers narrow their pool of potential candidates down to the most qualified few, it can be difficult to make a decision. They may all be equally qualified or they may have different strengths that are hard to compare. A deciding factor can be how well they will thrive at the organization. For example, a candidate that is excited about the company’s mission and values will likely perform better than one that doesn’t express as much interest in the direction the company is taking.

If hiring managers can implement the above tactics into their interviewing process, they are likely to hire the best applicant for the job. However, there are other risks managers need to be aware of as well. An overlooked applicant can interpret the company not hiring them as discrimination and file a suit against the company.  Employment practices liability is a very real problem for managers during the hiring process. To learn more about avoiding the risk of a discrimination lawsuit, contact the experts at The Reilly Company.