FORD & SERVISS, LLP is a unique, boutique law firm with particular expertise regarding complex insurance coverage, attorney professional liability and related commercial litigation.
We’re dedicated to excellence, consistent lawyering and the highest standards of the legal profession. We strive to provide Uncommon Illumination. That’s in our DNA! That means as a leader we’ll freely share several examples of our thoughts in our frequent blogs.
Going forward, we hope to provide you, from time to time, with our insightful blog on current events and important legal decisions by our courts. We’ll also give you a heads up about our professionals’ speaking engagements, seminars and news articles.
As a small law firm we are able to provide the kind of prompt, personal attention and flexible fee arrangements our select clientele demand. We stay focused on smart, cost-effective solutions that are consistent with the important legal interests of the clients we serve.
Mar
26
LET THE SUBCONTRACTORS BEWARE
Posted by Claudia J. Serviss | 2 Comments
It is not uncommon for a construction project to be insured by an Owner Controlled Insurance Program (OCIP). Subcontractors who participate believe they will be covered for property damage, usually for ten years from the completion of the project. They then move on to the next job without a thought to the finished project.
That complacency is misplaced. Recently a California Court of Appeal held that an insurance broker has no duty to notify the subcontractors if the insurer of an OCIP becomes insolvent, even when construction is still ongoing. Pacific Rim Mechanical Contractors, Inc. v. Aon Risk Ins. Services West (2012) 203 Cal.App.4th 1278. The developer/general contractor, who procured the policy, only had a duty to notify the subs if there was contractual language to that effect. The result was that when a construction defect lawsuit was filed six years after completion and Legion Insurance Company’s insolvency, there was no insurance coverage for the unknowing sub, who claimed he would have walked off the job had he known of the insurer’s insolvency. Aon and the developer/general contractor had learned the year before of the coming insolvency, but did not inform the subcontractors.
OCIPS seem to be here to stay. But subcontractors and those who represent them may need to be continually vigilant, not just at the onset, about the financial viability of the insurer behind the OCIP and not rely on anyone else to notify them if there is a problem.
