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Vol. 4, Iss. 1
January 14, 2015

Book Review:
Construction Defect Coverage:
Concise And Understandable



Construction defect coverage has become a hydra-headed monster. The occurrence issue. Business risk exclusions. Sub-contractor exceptions. Montrose endorsements. Additional insured endorsements. Contractual indemnity. And on and on.

Those confronting these challenging issues have lots of places to go for help. Cases, and articles about cases, are abundant. Google any construction defect coverage issue and the results will be astronomical. While these are surely useful resources, each is generally limited to a specific issue. Proceed this way and your library of construction defect coverage resources will resemble that house on the block with way too many additions.

Joe Junfola of Admiral Insurance Company gets this. And he sees a better way. Joe, with 37 years in the insurance industry, has put that experience into a just-published e-book: Construction Defect Claims: A Handbook for Insurance, Risk Management, Construction, and Design Professionals. It is, simply put, the fundamentals of construction defect coverage in one neat and tidy package. The book is CD coverage -- soup to nuts. All of the key issues are discussed, including: What is a construction defect claim?; Is faulty workmanship an occurrence?; Are construction defects property damage?; Trigger of coverage; Montrose issues; the various “business risk” exclusions; and reconciling contractual indemnity and additional insured rights.

Joe Junfola is not a lawyer. So that means one thing – he doesn’t feel the urge to sound like a lawyer. That’s not to say that the “Handbook” doesn’t discuss plenty of case law. That can’t be avoided when it comes to CD coverage. But what can be avoided is unnecessary complexity in the explanation. That’s where Joe’s book really shines. It teaches the core concepts of construction defect coverage without getting bogged in legalese and going in circles. He doesn’t dwell on comparing and contrasting the law in different jurisdictions. Of course this is important. But Joe’s objective is to explain the general principles. Now, the reader, armed with that understanding, can next tackle any jurisdictional issues.

Case in point. It is hard to imagine a clearer explanation of the relationship between additional insured rights and contractual indemnity than this from Joe:

1. Plaintiff sues the general contractor (“GC”).

2. GC tenders an additional insured claim to the subcontractor’s (“Sub”) insurer on Sub’s policy as an additional insured.

3. GC tenders to Sub for contractual indemnification based on the indemnity provision in the subcontract.

4. Sub tenders GC’s indemnification claim to Sub’s insurer.

5. Alternatively, GC tenders additional insured claim and contractual indemnity claim to Sub’s insurer.

[T]he general contractor has a direct relationship as an additional insured with the sub’s insurer. . . . [T]he general contractor does not have a direct relationship, as an indemnitee, with the sub’s insurer but will benefit from the policy because the sub is covered for its assumption of the tort liability of the general contractor[.]”

And if you still need help, this text is accompanied by a diagram depicting all of these actions and relationships.

Is construction defect coverage more difficult than what’s explained in Construction Defect Claim: A Handbook? Yes. But you gotta tread water before you can swim. You wouldn’t be handed Mozart for your first piano lesson. And nobody goes on I-95 for their first driving lesson. Yet, in my experience, some people are trained to handle construction defect claims by having a big, ugly file thrown on their desk and told to have at it. Your chances of becoming adept at CD claims is much greater if you have the opportunity to first learn the core concepts before being tossed into the deep-end. The “Handbook” provides the building blocks needed to later understand the more complex and nuanced construction defect coverage issues.

Construction Defect Claims: A Handbook for Insurance, Risk Management, Construction, and Design Professionals is one-stop shopping for guidance for those who confront construction defect coverage -- insurers, lawyers, risk managers, brokers and the folks who actually hammer in the nails and draw the blueprints.

More information on Joe Junfola’s Construction Defect Claims: A Handbook for Insurance, Risk Management, Construction, and Design Professionals can be found here:


[Full disclosure: I do coverage work for Joe.]

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