Can you file a claim against a construction company?

Question: We purchased our home from a construction company approximately 4 years ago and started experiencing minor cracking in various places around the home.  When we spoke with our construction company, they told us they only warrantied the damage if it was “structural,” and then only if the damage was severe.

My insurance company suggested I sue the construction company.  What role does my insurance company play in this?

What you should expect

You are entitled to request your insurance company conduct an investigation.  Rather than simply talking to your insurance company, I would suggest you write to them and ask for a sinkhole investigation.

It is common for insureds to get caught between insurance companies and construction companies in these situations.  We frequently see homeowners who battle with the contractors for years (with no success), only to find out the home had actually been built on a sinkhole-prone area.

While this may seem unfair, it is not.  The insurance company can actually sue the construction company in a claim associated with recovering any payments made to you.  This is referred to as “subrogation,” and is a part of the insurance process.

What your insurance company will do

The easiest way to look at this is that you purchased insurance for the new home from your insurance company, and now it is damaged.

The insurance company should investigate and then make a decision about how to proceed with the contractor.  If enough insurance companies pay these claims, they can use their lobby to force tougher building standards, which benefits everyone (tongue in cheek, but you get the idea).

Sometimes the insurance company will deny the claim on defective construction or latent defects, but you may still have coverage under sinkhole when such defects are present.