Construction Companies When to Sue Insurance Companies

Employment law

It’s a manager’s worst fear in a construction site: Someone damaging the building, vandalizing the property, or worse, becoming injured on the job. It is a situation that demands time to think, plan, and then react, wherein the damage and the worker must be accounted for.

If the property has been damaged, the manager and his or her team will need to take stock of what the damages are. It could be a busted beam or fallen brick. If the property has been vandalized, the manager will have to take documentation of the damage, work with the police and have them file a police report, and then contact the insurance company.

If the worker has been injured, the manager will have to document what happened, have the worker give an oral report, and contact insurance to file a claim for possibly workers’ compensation or personal injury. In all three cases, calling the insurance company is important for getting the money flowing in to repair the damage or help the worker.

But sometimes this isn’t done. Sometimes the insurance company decides to fight the claim, foregoing its original agreement and refusing to pay any monetary compensation for the damaged site or the worker who has hurt him or herself. It is a difficult moment for any manager but it usually ends up like this: A litigation and a court case.

Between April 2006 and January 2011, the construction eliminated nearly 40% of its workforce. Much of this had to do with the housing market crash in the later part of that decade. The housing bubble bursting eliminated the need in many cases for new housing or buildings. Property values plummeted and no one had money to invest.

Starting in 2011, the housing market, under the leadership of President Barack Obama and the Fed Chair Ben Bernanke, began to rebound, if slowly. Slowly, construction jobs became more prevalent and companies began investing in the building of new houses and buildings. Development began and construction jobs started to return.

Today, employment is at the lowest point before the Great Recession at 2%. More and more jobs are becoming available for Americans and people who get jobs are more likely to stay employed thereafter. Although much of this is due to President Obama’s budget, more people are crediting Donald Trump for the boom in the market.

For managers looking to head up a construction site, one of the first orders of business is to get something called Builder’s Risk Coverage. Builder’s Risk Coverage is a type of insurance policy that covers the possible unexpected and unforeseen damages that occur at a building site. It is usually for a one year period, then renewed if necessary.

Builder’s Risk Coverage usually covers acts like vandalism or theft–issues that plague construction sites, especially ones where there is valuable property. Builder’s Risk Coverage usually applies in cases where a manager thinks it’s appropriate, but sometimes a manager is left to fend for himself–or fight the insurance company.

The American Arbitration Association in 2015 took care of 551 construction cases, ones with claims of $500,000 or more. The largest mediated construction case was for $2.6 billion. The largest arbitration case was $96 million.


Alternative dispute resolution is the preferred conflict-management process in the construction industry. The median time frame from filing to award for 2015 construction arbitration cases was just 232 days, or less than eight months.


According to the American Arbitration Association, the largest case resolved by one arbitrator was a claim of $232 million. The smallest case (which was resolved by a panel of three arbitrators) was a claim for just $23,000.

Those statistics show the difficulty construction managers face when fighting insurance companies. The battles take a long time and cost a lot of money. Sometimes the mediated reward is large, for $2.6 billion, while others, such as an arbitration case, are just for $96 million.

Attorneys handle this process. Attorneys or lawyers for construction companies can battle the attorneys for insurance companies in mediation, arbitration, or court itself. A construction lawyer or general attorneys can help win a case that was thought for lost. Attorneys are skilled at legalese and battling for your case.

Attorney can help a construction company win their case. More.