How to Tell if You Have a Construction Surety or Insurance Case?

One of the biggest sources of confusion on construction projects is figuring out whether you're dealing with a claim that's covered by insurance or a surety. The two concepts may sound closely related, but a construction surety attorney will tell you they can be quite different. If you're not clear on which one you're dealing with, a construction surety lawyer will want to look at these three things.

Physical Harm to People

The odds that a case is an insurance claim go down dramatically if no people were harmed. Generally, physical injuries on construction sites are covered by some type of workers' compensation insurance because somebody usually employs the injured party. There are also scenarios where there might be personal injury claims. None of these are surety claims.

Issues With the Job

Parties obtain sureties to address professional problems that might potentially occur due to the work itself. In other words, they speak to things like warranties or workmanship.

Notably, there may appear to be some overlap with professional liability insurance. This generally applies to the work of parties like engineers and architects, though. A surety usually covers the execution of the work.

If a contractor poured concrete at your site and produced uneven results that tilted the structure beyond acceptable tolerances, for example, that's probably going to fall under a surety for the contractor. Conversely, if the work was done correctly using the wrong specifications from an engineer, that's probably a professional liability claim against the engineering firm.

Correctable

Normally, sureties cover correctable problems. The purpose of a surety is to provide an incentive for contractors to make fixes before projects wrap. When the contractor purchases a surety for a job, the issuing company awaits the pending completion of the final checklist for the project. If everyone agrees that everything is fine, then the surety effectively expires unpaid. The purchaser loses a small fee but gains peace of mind.

If a claimant says something is wrong, though, the surety issuer will pressure the contractor to correct it. Should the contractor be unable or refuses to rectify the situation, then the surety is supposed to be paid to the claimant. The surety firm then expects the contractor to make it whole on the claim.

There are three ways this might lead you to hire a construction surety attorney. First, you might hire one out of an abundance of caution and to get the paperwork right. Second, the construction firm might object and drag the claim out. Third, the issuer might reject the claim, forcing you to seek legal remedies.  

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