This article was written with the assistance of AI and edited by Angela Sabarese.
In a recent CLM webinar, “Construction Defect Claims: Navigating the Complex World of Risk Transfer,” four experts shared insights on effectively managing construction-defect claims and risk transfer strategies. The panel featured Rishabh Agni, of counsel, Forsberg and Umlauf, PS; Jackeline Rodriguez, partner, Hamilton, Miller & Birthisel LLP; Anita Thornell, select risk-claim specialist Nationwide Insurance Company; and Derrick Mullen, vice president and director of casualty claims, home office claims, Seneca Insurance Company.
Key Strategies for Effective Risk Transfer
The panel emphasized the critical importance of early document collection and retention when handling construction claims. Essential documents include contracts, certificates of insurance, job files, change orders, lease agreements, and correspondence that establishes timelines of work performed.
"If you're a general contractor (GC) or a developer, any subcontractor, or any party that's part of potential litigation, it is extremely important…to tender as early as possible for your AI and CI," noted Thornell, highlighting a key strategy for effective risk transfer.
Communication emerged as another crucial element, with panelists discussing how coverage counsel, defense counsel, and adjusters must coordinate their approaches while navigating jurisdictional differences in handling construction claims. The experts shared various methods for resolving complex cases involving multiple carriers and parties, from coverage mediations to creative settlement structures.
Resolving High-Stakes Cases
Mullen offered a pragmatic perspective on resolving high-stakes construction cases: "Nobody wants to try a construction-defect case. It could be hundreds of millions of dollars. Let's just swallow a pill now.... We're not getting out. Nobody's getting out in summary judgment. You're not getting dismissed."
The panel also addressed changing industry dynamics, including jurisdictional differences in contribution actions and the strategic use of declaratory judgments. Ultimately, the discussion revealed that effective risk transfer in construction claims requires early action, thorough documentation, strategic communication, and sometimes creative resolution approaches tailored to each unique situation.