Some scarey stuff. The Portland Oregonian newspaper is running a series of three rather lengthy articles outlining current problems with defective construction and how this has affected rising liability insurance rates and smaller contractors. It also describes the battle between the houses of the Oregon Legislature with the House controlled by Republicans developing legislation favoring contractors and the Democratically controlled Senate fashioning bills that favor homeowners and, particularly, trial lawyers. The first in the series covers a variety of horror stories of severe damage to relatively new homes, the second one covers the insurance and legislative fronts. Makes me wonder if I can afford, or even obtain, liability insurance next year. Some excerpts from the second article:
In a 2004 survey by the Oregon Insurance Division, the state’s major carriers estimated they would pay out between $81 million and $191 million for construction defects on policies in place from 2001 to 2003.
In California, lawyer fees and other legal costs have surpassed settlement costs by a 4-to-1 ratio, said Mike Strich, risk management and insurance director for the California Building Industry Association.
Mike Purcell, head of Gray Purcell, a Tigard contractor, said the firm’s liability insurance jumped 60 percent in price during the past two years for significantly less coverage. The annual deductible increased from $5,000 to $100,000. Also, during the last four years, Gray Purcell’s insurer has “excluded” from coverage any claims that involve mold or synthetic stucco. More recently, they excluded any residential project – period.
The first article is at: http://www.oregonlive.com/news/oregonian/index.ssf?/base/front_page/1119089375131700.xml&coll=7
The second article is at: http://www.oregonlive.com/news/oregonian/index.ssf?/base/front_page/1119088935131700.xml&coll=7
related article on homeowner safeguards in B.C.: http://www.oregonlive.com/news/oregonian/index.ssf?/base/front_page/1119088926131700.xml&coll=7
Replies
Up here in SW British Columbia we are still dealing with the aftermath of "Leaky Condos", such that now any housebuilder has to be registered with the Homeowner Protection Office. This means posting effectively a bond by insuring their work for 2-5-10 years (varying levels of accountability, eg within first 2 years repairs being at builder's expense, through to the insurer paying up to the 10 year mark). Many consider this a way for the Govt to glean extra money, thru the HPO, to pay settlement costs on the condos. Be that as it may, the idea that every contractor, be it one man or a national co., is responsible for his/their work is a definite plus...an applicant has to prove worthiness - and of course a nice fat cheque. The HPO provides not only literature on what is acceptable, (walls 1/4" out of plumb are ok), what the HO must expect (cracking up to 1/16 in grout is normal), but also provides bulletins on accepted construction techniques, and inspections to prove it.
While this may not have weeded out the scum (mixed images!), it at least makes them more conscious of what they should be doing if they want to continue in business. And it's a safe feeling to see a HPO and insurer's Warranty sticker in the window.
cheers
***I'm a contractor - but I'm trying to go straight!***