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New Florida ruling affects construction litigation

Construction is an enormous industry in Florida, and large and complex projects require hundreds of people and several companies to complete. Defects in skyscrapers and other large buildings are rare, but any one problem can cause a variety of hazards that demand repairs and expensive delays.

Most contractors and construction companies are required to carry insurance against building problems or negligence that can lead to construction defects. This can aid companies or individuals who are sued for the results of these defects, and a recent ruling by the Florida Supreme Court may change the nature of insurer's relationships with the contractors they cover.

The case involves a general contractor on a high-rise condominium that received several notices of defects under Chapter 558 of the Florida Statutes. This section deals with the resolution of construction defects before a suit must be filed.

The contractor's insurer covers suits, defined as "civil proceedings," but did not cover legal fees for pre-litigation defense. However, the Supreme Court ruled that the company's defense in the Chapter 558 process is a form of alternate dispute resolution that meets the definition of a suit under the insurance policy.

Legal commentators believe the ruling will become a precedent for claims from insurers in the future. This is new territory in construction litigation in the Sunshine State.

Anyone or any company may suffer from a construction defect, and a lawsuit or settlement may solve the issue or dictate the terms for compensation. Legal representation is often a recommended step for contractors, property owners or renters affected by defects in buildings or equipment.

Source: Insurance Journal, "Florida Supreme Court Ruling to Have Big Impact on Duty to Defend Construction Cases," Elizabeth B. Ferguson, Jan. 04, 2018

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