Typically, when an insurance company gets dragged into a construction defect case one thing is certain; high defense costs. As home building ramps up around the country and particularly in the western states such as California, problems inevitably arise and with them come construction defect lawsuits.
Studying the metrics of construction defect cases show us that defense costs tend to be high completely regardless of whether indemnity payments are high or low. The nature of these kinds of cases leads to high defense costs due to: a multitude of parties involved, boxes of documentation to review, and excessive time spent by attorneys at site inspections, depositions, and mediations. So the million dollar question becomes: what can be done to control these costs? Fortunately there are options. From the law firm’s perspective, a clear focus early on in the case is crucial. Many of these cases tend to settle in a similar range, and when a firm can target an early settlement this can save hundreds of thousands of dollars in defense costs over the life cycle of the case. Additionally, there are many areas of opportunity in controlling costs. Many firms tend to live in the stone age and print out every document they need; resulting in thousands of dollars in printing boxes and boxes of documents.
When experts become involved the cost of these cases can skyrocket, and paying reasonable costs for experts is a huge cost saving measure.Sometimes it is on the insurance company to control and direct the firms they are paying. Pushing firms to resolve cases instead of spinning their wheels can save money in the long run. Additionally, instituting a robust review of attorney billing can prevent paying out for excessive time spent on unnecessary work. Even just instituting the program shows firms their time is being watched and encourages the firms to self-review and be conscious of the time they are spending.While construction defect cases can be very costly, insurance companies shouldn’t feel resigned to feeling like they don’t have any control over the money going out the door. Taking a vigilant and smart approach results in more efficiently handled cases that can save millions of dollars in unnecessary defense costs in the long run.
