All Forum Posts by: Michael Pepe

if the property is owned by the LLC, then the LLC must be included as an insured on your property and liablity coverages. Talk to an experienced broker to make sure it's done correctly.

Originally posted by @Account Closed:

@Chris Seveney, I understand there will be no warranty as its a 2006 property and I bought it as a foreclosure. But isnt anyone accountable for faulty construction? @Greg H. - Thanks, I will get a second opinion. 

The builder is responsible for faulty construction, but not to you. The builder's responsibility runs to the person or entity that hired him.  Your recourse would be to the seller, but since you bought as-is in a foreclosure, you do not have recourse there either.

Take a close look at your property insurance, though, and discuss with your broker.  Many "faulty workmanship" exclusions have an exception for ensuing loss. So while it wouldn't cover the costs to repair the faulty workmanship, it may cover the cost to repair the resulting damage (i.e. water damage to interior of the house, etc.), but only if that type of damage would otherwise be covered (i.e. if the work resulted in mold, but you have a mold exclusion, then no coverage for the work or the mold).

Builders Risk is your property insurance during the renovation - It does not cover third party liability.  You want it to cover any damage to the property during the renovation, subject to typical exclusions such as faulty workmanship, mold, etc. In your case, you should consider including coverage for vandalism.

Your friend should seek legal advice. Most auto policies include a defense obligation that means If there is a possibility that the auto policy covers the loss, the insurer is likely obligated to hire a lawyer to defend your friend against any suit, and/or settle it within the policy limits. The issue here seems to be that the liability may exceed the limits of the policy. Unfortunately, as a general rule you, cannot purchase insurance to cover a loss that has already occurred so purchasing additional limits is likely not an option. So if there is a judgment entered against your friend, and your friend does not pay it, the injured party may attempt to levy against your friend’s assets to secure the judgment. Most jurisdictions also have laws to protect plaintiffs when a defendant attempts to hide assets to avoid having to pay a judgment. In some cases transferring an asset to another name or entity may amount to a fraudulent transfer, exposing the person to additional liability. A lawyer licensed to practice in the jurisdiction can advise as to specifics of what, if any, options are available to your friend, and to advise her in how to weigh any options and the risks and benefits that may be involved.

You need to have this corrected. If you are not included on the policy, you are not insured. In the event of damage to the property, the Management Company would likely not be insured either, since it does not have any insurable interest in the property. 

You also would not be covered for defense or liability for a claim brought against you.

As others have said, your agreement with the Management Company may require you to add them as an additional insured for liability purposes, and there are pros and cons to doing so, but you should review the insurance requirements and indemnity obligations in the agreement to make sure the insurance you bought complies, and covers you for any potential indemnity obligations you may have to the Management Company.

Discuss with your broker/agent, or find one that understands this better. Feel free to DM me if you have additional questions.

@Michael Norris makes s good point. Builders Risk insurance is property insurance, not liability insurance. It will not provide you with a defense or indemnity from claims made against you (i.e. a worker getting injured, a third party falling on your jobsite, or damage to a neighbor's property). Even though a worker may be covered by their employer's workers comp program, they may still sue you for certain types of injuries (varies by state). For this reason, you still need to have  liability insurance to protect you from claims for bodily injury and property damage, and solid downstream contractual risk transfer to your contractors and their liability insurers, who you should require name you as an Additional Insured on their policies for any claims arising out of their work.

 it can be very difficult to purchase or extend the policy mid-project, if you encounter any type of delay. So, it usually makes sense to purchase a longer period than estimated construction.

Also consider coverage for Business Interruption/Loss of Rental Income. If you have major damage, like a Fire, you will not be earning income while you are rebuilding the property, which will take months. Discuss options and pricing with your broker, but a policy covering 12 months of loss of income, with a 14 to 30 day deductible period is typical.

@Raj Kamaria I'm sorry to hear about the fire at your property. I hope no one was hurt.  

As far as insurance goes, you'll want to present the claim to the insurer in the best way to maximize coverage available under the policy. Every claim is different, but there are often areas of a policy that may be subject to interpretation. Particularly where there is business interruption, there can be disputes about how the loss is calculated. 

In those cases, representation from an adjuster or an attorney experienced with insurance can help you organize the claim and argue for coverage where necessary. Whether it makes sense to hire an attorney v. adjuster (or neither) typically depends on size of the claim, and any pushback you receive from the insurer. 

PM me if you'd like to discuss in more detail. I 'll try to answer your answer any questions you may have.

I am a New Haven-based lawyer, and I've used Bob Miller before.