In an unpublished decision, the Appellate Division recently enforced an insurer’s duty to indemnify and defend a condominium association for damages resulting from an occurrence during the policy period even though they were not discovered until after the policy had expired. Steinbauer v. East Coast Acquisitions, LLC, 2007 WL 2593007 (App. Div. September 11, 2007).
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Professor Herbert M. Kritzer’s upcoming law review article on the practice of insurance defense lawyers is very beneficial for litigants to understand how the relationship between the three players who will be involved for each Defendant entity (insurance carrier; contractor-policyholder; defense attorney) works, and where the loyalties and long-term relationships lie.
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It is important to stress that the success of a construction defect case depends on the plaintiff’s claims triggering insurance coverage for the defendants. Generally, contractors take advantage of the corporate form to shield their personal assets from victimized homeowners, and if they haven’t, you can be sure that they don’t have enough assets available to pay for the damage they have caused. That is why insurance coverage is important. If a claimant can get the contractor’s insurance company to step to the plate and agree to defend and indemnify the contractor, the insurance policy provides a ready source of cash to pay settlements or judgements.
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Before bringing suit in a construction litigation context, it is imperative that the plaintiff undertake a careful analysis of insurance coverage. Otherwise, the plaintiff can find itself in the unenviable position of spending hundreds of thousands of dollars in attorneys’ fees and expert fees over the course of three or four years of litigation, prevail after weeks or months of trial, only to find that there is no insurance coverage with which to pay the judgment that the plaintiff ultimately gets.
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