A recent ruling by the Florida Supreme Court could impact insurer participation in the pre-suit process for resolving construction defect disputes. In the case Altman Contractors, Inc. v. Crum and Forster Specialty Insurance Company, Florida’s highest court held that an insurance carrier’s duty to defend may be triggered by a Chapter 558 construction defect notice against its policyholder, but only as an “alternative dispute resolution proceeding” requiring the insurer’s consent.
Phelps Dunbar Associate Justin Shindore and Partner Bret Feldman of the Tampa office served as sources for the Law360 article. Mr. Feldman is a board-certified construction lawyer and Mr. Shindore is an insurance coverage lawyer with experience handling construction-defect claims. Mr. Feldman and Mr. Shindore shared their thoughts on how the decision would affect the construction industry at large:
Insurance trade groups had warned the Florida Supreme Court that a decision in Altman Contractor's favor could drive up premiums for CGL policies within the construction industry, but given the limited nature of the court's conclusion, that is unlikely, according to Justin Shindore and Bret Feldman of Phelps Dunbar LLP.
"Carriers are sophisticated; they know the risks of underwriting contractors and subcontractors in Florida," Shindore said. "This decision won't alter the way they assess those risks."
Mr. Shindore was also asked to give his thoughts about an argument made by policyholders that insurance companies issuing policies in Florida had implicitly consented to the policyholder's participation in the 558 process as a matter of law. Mr. Shindore responded:
"I think that [argument] is a stretch, but there will probably be questions raised in hindsight about whether an insurer consented to the 558 process when it has been involved in the process in some way," said Phelps Dunbar's Shindore. "There will be questions of implied consent. I think that is where the law will develop from here."
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