Recent Insurance Claims From Specialized Contractors

Recent Insurance Claims from Specialized Contractors

People ask me this question all the time: "yea, but really Aaron. How often does that actually happen?" Its gotten to the point that its almost comical. Here's a list my company has compiled of our most recent claims for specialized contractors. This is just from our book of business in the construction industry....from masonry and concrete guys, to grading, paving, HVAC, Plumbing, Electrical.

Take a look for yourself! The claims are outrageous:

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Amount Paid/Reserved Situation
$2,452,000 Property: Fire caused damage to the insured's building and inventory. Cause of the fire was unknown. Building $1.32M, BPP $1.12M, and Business Income $5K.
$504,000 Property: Burglary and theft of personal property.
$224,000 Property: Hail Damage to metal roofs and A/C units on seven insured buildings
$177,000 Property: Wind damage to roof and interior water damage.
$172,000 Property: Tornado destroyed insured building and personal property.
$120,000 Property: Water damage from one of the rental units above the insured's location. The tenant did not carry insurance.

Systems Breakdown

Amount Paid/Reserved Situation
$24,000 Mechanical Breakdown: Insureds water jet cutting table malfunctioned and is no longer working.
$24,000 Artificially Generated Electrical Current: Power surge damage to numerous electrical and computer items.
$14,000 Artificially Generated Electrical Current: Insured had a power surge causing damage to various pieces of equipment.
$6,500 Artificially Generated Electrical Current: Brown out/power outage caused the control panel to go down in press.


Inland Marine

Amount Paid/Reserved Situation
$580,000 Installation Floater: Insured had supplies stored at an off premises warehouse and the warehouse caught on fire causing damage to some of the supplies.
$250,000 Specialty Trade Contractors Extension: Insured misinterpreted HVAC plans and incorrectly installed components. Errors were noted during the construction and corrected.
$165,000 Contractor's Equipment: Hydraulic line burst and started the insured's excavator on fire.
$125,000 Borrowed, Leased, Rented or Hired BPP: Insured borrowed crane to move A/C unit and tipped it over - operator error by insured's employee.
$75,000 Installation Floater: Theft of copper tubing and wire, tools, equipment and other property from jobsite - these claims represent the greatest frequency of any loss dealing with all contractor TOBs.
$55,000 Borrowed, Leased, Rented or Hired BPP: Insured rented two pieces of equipment to customer and they were never returned. Insured failed to obtain proper identification of customer.
$35,000 Specialty Trade Contractors Extension: Insured incorrectly read blue prints and installed the wrong A/C units in the wrong place on roof.
$8,000 Specialty Trade Contractors Extension: Insured ran wiring for a UPS system. The terminals were reversed and when breaker was energized, the unit smoked.
$3,000 Specialty Trade Contractors Extension: Insured installed pump motor and caused a power surge to it.


Inland Marine - Contractors Extension Endorsement

Amount Paid/Reserved Situation
$250,000 Contractors Extension Endorsement: Insured misinterpreted HVAC plans and incorrectly installed components. Errors were noted during the construction and corrected.
$101,000 Contractors Extension Endorsement: Insured installed fire alarm system with different material than was outlined in the job specifications. The insured had to tear out and redo the work.
$57,000 Contractors Extension Endorsement: Electrical contractor's employee had four separate faulty workmanship losses where he incorrectly installed wires to transformer and flex connections, installed wrong compression fittings and wire, installed wrong throat fittings and did not install correct size pigtails on light fixtures.
$35,000 Contractors Extension Endorsement: Insured incorrectly read blue prints and installed the wrong A/C units in the wrong place on roof.
$20,000 Contractors Extension Endorsement: The state inspector is not approving that breaker boxes that the insured installed in a multi-unit building. The inspector is stating the insured should have installed residential boxes rather than commercial.
$8,000 Contractors Extension Endorsement: Insured ran wiring for a UPS system. The terminals were reversed and when breaker was energized, the unit smoked.
$4,000 Contractors Extension Endorsement: Insured installed ten feet of 3" pipe, rather than 4" pipe, which could cause plumbing problems in the future. The homeowner would like this repaired which involves tearing up the basement floor.
$3,000 Contractors Extension Endorsement: Insured installed pump motor and caused a power surge to it.
$3,000 Contractors Extension Endorsement: Insured installed a furnace that was wired wrong and they fried the control panel.



Amount Paid/Reserved Situation
$35,000 Crime: Employee theft of 401(k) contributions.
$3,200 Crime: Employee theft of copper cable and lugs.


General Liability

Amount Paid/Reserved Situation
$1,000,000 Operations Liability: Insured was working on a commercial building construction site, responsible for erecting wall panels and structural steel components. The insured's employee was cleaning up at the end of the day, pushing debris off the floor to a dumpster sitting on the ground below. A metal stud missed the dumpster and landed on the claimants head/shoulder. The claimant had shoulder surgery and is suffering from a closed head injury. He has not worked since the accident.
$1,000,000 Products-Completed Operations Liability: Carbon monoxide poisoning resulting from unit insured installed and serviced
$685,000 Operations Liability: Insured hit a gas line while performing work at a jobsite causing a gas leak. One home exploded and several others nearby sustained damage.
$685,000 Operations Liability: Insured installed a new bathroom. The fitting on the tub leaked causing water damage.
$630,000 Operations Liability: Insured employee was soldering piping in the wall of a condo building when the building caught on fire.
$525,000 Products-Completed Operations Liability: Plumbing and heating contractor was hired to install a furnace and AC in a rural home remodel job. They also installed the gas lines in the home to the furnace, stove, and fireplace. Four years after the project was completed a fire broke out in the home. The home was completely destroyed. The homeowner and three of her grandchildren were killed in the fire. Allegations against our insured centered on faulty installation, failing to check the gas lines for leaks, and failing to properly ground the system.
$465,000 Products-Completed Operations Liability: Insured installed plumbing drain. Later, the drain failed due to improper installation of the waterproofing membrane, which resulted in damage to electrical lines and other items.
$304,000 Operations Liability: Insured serviced electricity to a new home under construction and when the power company hooked up the electricity the home started on fire and was destroyed.
$263,000 Operations Liability: Insured employee stepped on a sprinkler pipe causing pipe to break resulting in water damage to residential units.
$124,000 Products-Completed Operations Liability: Insured was subcontracted to install plumbing in a new home and the water supply line in the main floor bathroom was not tightened down enough and the line started leaking. The claimants were not home for seventeen days resulting in serious water damage.
$100,000 Products-Completed Operations Liability: Insured performed service work on a customer's furnace and late the furnace malfunctioned causing soot damage and carbon monoxide poisoning.
$46,000 Pollution Liability: Insured was a glazing contractor hired to caulk around windows on a multi-story office building. The Insured was using a 60' boom lift to reach the glass. The hydraulic hose on the boom lift broke unbeknownst to the insured and 55 gallons oil hydraulic fluid leaked onto the sidewalk, parking lot, and adjoining lawn. Steam cleaning was needed to remove the stains from the concrete and three feet of surface dirt had to be removed and replaced. Significant costs were incurred to clean up the hydraulic oil spill.


General Liability - Fungi or Mold

Amount Paid/Reserved Situation
$25,000 Fungi or Mold: Insured customer alleges mold and water damage.
$14,000 Fungi or Mold: Duct work, which the insured had installed, has fallen down and created mold damage.
$8,000 Fungi or Mold: Insured performed work on a shower valve. The claimant alleged it leaked for 16 months, but the damage does not support this. Claimant is also claiming respiratory injury from mold.
$5,000 Fungi or Mold: A leak in HVAC caused damage to claimant's ceiling and possible mold.
$2,000 Fungi or Mold: Insured was making repairs. Water was not shut off and caused damage to carpet and molding.


Additional Insureds

Amount Paid/Reserved Situation
$41,000 Products-Completed Operations Additional Insured: Insured was a subcontractor in a residential development consisting of 166 homes. Water damage to the homes began being noticed five years after they were completed. Many areas were identified as potential sources for the water leaks, including roofing, plumbing, exterior grading, siding, and landscaping. A lawsuit was filed alleging numerous construction defects against the general contractor, who was a national home builder, as well as nine subcontractors, including our insured. Total damages sought were in excess of $3 million. Damages related to our insured's work were approximately $300K. The GC was listed as an additional insured (AI) that included products completed operations under our insured's policy. The GC demanded we share in their defense as they were listed as an AI under our insured's policy. The case was settled for $300,000. The defense costs to defend our insured were $48,000. In addition, we had to pay another $41,000 towards the GC's defense.
$200,000 Products-Completed Operations Additional Insured: Our Insured contracted with a large fuel refinery operator to work on a steam cleaning system used to clean their refinery tanks and equipment. Pursuant to the contract, our insured had the refiner listed as an additional insured (AI) that included products and completed operations under our policy. After our work was completed, the refiner contracted with another company to perform the cleaning services. An employee of the company retained to do the cleaning was severely burned while using the system installed by our insured. He filed a lawsuit against the refiner alleging it was negligent in failing to provide an adequate safety program, failing to perform maintenance on the system, and failing to comply with OSHA standards. Even though the safety issues were the responsibility of the refiner and did not involve our insured, the refiner was able to tender the defense of this suit to our insured because they were listed as an AI including products and completed operations on our insured's policy. The AI exposure forces the insured's policy to defend the refiner, which is expected to exceed $200,000.
$32,000 Ongoing Operations Additional Insured: Our Insured was a plumbing subcontractor in a development consisting of 21 condominium buildings, each containing nine units. The construction was completed over the course four years. The developer was a national home builder. A construction defect lawsuit was filed against the developer as well as numerous other contractors, including our insured. The allegations were very vague especially regarding our insured, but the developer was able to tender the claim to our insured because the builder was listed as an additional insured (AI) under our insured's policy. The AI endorsement naming the developer only provided coverage to the AI arising out of ongoing operations. Since this claim arose from operations that had been completed six years prior, we did not have to pay for the builder's defense. The other three subs. that had provided AI coverage on a completed operations basis, however, were stuck paying a share of the developer's defense. We settled on behalf of our insured for $32,000 and our insured was dismissed from the lawsuit. The developer settled the suit against them for $3.7 million. The developer incurred in excess of $400K in defense costs, which the other three subs with AI obligations were forced to share. Had our insured's policy provided the AI completed operations coverage, they would have had to pay $80,000 for the defense of the builder. In this scenario, limiting the AI exposure to only ongoing operations, resulted in a savings of $80,000.


Business Auto

Amount Paid/Reserved Situation
$1,000,000 Auto Liability: Heating and cooling contractor employee was driving a company van on his way to a service call. Employee ran a red light in a 45 mph zone and struck claimant's vehicle. The employee was talking on a cell phone at the time of the accident. The claimant was a coffee shop owner. She suffered a fractured vertebra which required cervical fusion. She claims she is unable to operate her business.
$1,000,000 Auto Liability: An electrical contractor allows a service technician to drive the company van to and from work. The insured employee was heading home at 5:30 p.m., traveling in the right lane of a two lane highway, with his cruise control set at 60 mph. He dropped something on the floor and bent over to pick it up. When he looked back up, he saw the claimant driving a motor scooter directly in front of him. He was unable to stop and struck the scooter. The claimant was thrown from the scooter and later died from her injuries. The insured driver has no idea why he did not see the scooter prior to the accident.
$450,000 Auto Liability: Employee was driving to a job site at 10:30 a.m. He was not familiar with the area and in the process of looking at various addresses as he passed by, failed to notice a stop sign. He ran the stop sign going 40 mph and broadsided the claimant vehicle. Insured driver was not on the driver's list. His MVR was ordered after the accident and it came back clear. The claimant suffered several facial fractures and had neck surgery. There will be some permanent scarring on his face.
$1,000,000 Auto Liability: Plumbing and heating contractor employee, age 74, was driving service van when he failed to see vehicle in front of him stop for red light and rear ended the claimant vehicle. There were four people in claimant vehicle and all were injured. Driver's MVR contained no violations.
$750,000 Auto Liability: Insured owner, age 59, was involved in rear end accident at 7:30 a.m. He was not working on the day of the accident, although he was driving company vehicle. He could not recall to the police what happened or why he was on the road at that time. He was charged with DUI. His MVR revealed another accident and subsequent DUI charge one year earlier. The claimant was a 35 year old paramedic. She underwent cervical fusion and is unable to perform her duties as a paramedic.


Workers Compensation

Amount Paid/Reserved Situation
$3,300,000 Work Comp: 48-year old millwright employee was on a scissor lift, which was raised six feet in the air. Despite a requirement to wear a harness and being a certified safety trainer, he chose not to wear the harness that was available to him. He climbed onto the railing of the lift and while stepping from the railing to the silo that he was working on he apparently lost his balance and fell backward striking his head and upper back. The employee suffered multiple compression fractures of the spine and severe head injuries. It was initially believed he would not survive. The employee has not returned to work and long term treatment will be required.
$797,000 Work Comp: Employee was a 41-year old plumber installing a pipe vent in a vaulted ceiling. He cut through the ceiling with a reciprocating saw and laid the saw on the roof. He went down the ladder and when he came back up, he bumped the cord causing the saw to slide down the roof and fall through the opening. The saw struck him next to the right eye and he fell off the ladder. He was taken by ambulance to the hospital. He developed an infection and died of a massive stroke eight days after the injury.


Employment Related Practices Liability

Amount Paid/Reserved Situation
$25,000 Age Discrimination & Wrongful Termination: Employee suffered non-work related injury that caused him to be off work two months. Employee returned to work with doctor's okay, but employee didn't seem able to handle the physical requirements of the heating and cooling installer position. No physical ability testing conducted. Insured put employee back to work.

Insured received complaints from other employees about the employee's work. When work slowed down employee was laid off. Insured indicates lay off was with intention of bringing him back when work picked up again, but it never really did. Investigation showed insured did not lay off two younger employees with less seniority.

Employee alleged age discrimination. Employee was hired at age 59 and was 62 when laid off. Investigation indicated that employee was referred to as "old man" by co-workers.

Defense attorney believed that had the insured implemented job requirement testing in place that the claim would not have occurred. Observations of the employee following his return to work indicate that although he had a doctor's release to return to work, that he would not have been able to complete/pass the physical requirements necessary to perform the HVAC installer position.

$11,000 Discrimination & Wrongful Termination: Employee alleges he was terminated because of his gender (male), race (white) and age (66). Employee indicates he was terminated by female supervisor and replace with a younger native american male. Employee filed a charge with the state human rights agency and received a probable cause finding.


Business Errors & Omissions

Amount Paid/Reserved Situation
$600,000 Faulty Workmanship/Design: Insured completed work on boiler project for a large hospital. The city provided the design and the architect was through the general contractor. It was later determined that the system was not providing the necessary heat to the hospital. There was some inefficiency noted in the design of the system, as well as questions regarding the size of the piping used by the insured. Although the insured followed specs, potential liability existed as they didn't use their professional expertise to question the specs.
$500,000 Faulty Workmanship: The insured was performing HVAC upgrades at a duplex and there was a fire.
$300,000 Faulty Workmanship: Insured installed solar panels at a commercial retail location three years ago. The panel box caught fire causing interior damage. It appears there was an issue with the panel box that was manufactured by a separate entity.
$209,000 Faulty Workmanship: Insured installed heating system which failed to work properly.
$80,000 Faulty Design: Insured hired to design a chiller system to cool down melted rubber. The insured designed and installed a 50-ton chiller. After the job was complete, the claimant began complaining that the rubber was not being cooled down as quickly as was needed. It was determined that a better system would have been designed using a 100-ton chiller. Insured had to redo the system using a bigger chiller. The additional costs for the larger cooler are not covered.
$79,000 Faulty Workmanship: Insured was a plumbing subcontractor at the claimant's building. Water leaks are occurring at connections between galvanized and plastic pipes. No water damage, but joints must be redone.
$79,000 Faulty Workmanship: Insured subcontractor performed faulty pipe insulation which caused condensation and water damage. Pipes had to be reinsulated.
$78,000 Faulty Workmanship: Water piping installed by insured now leaking and needs to be fixed.
$73,000 Faulty Workmanship: Insured's customer's geothermal heat pump failed due to rock damage.
$71,000 Defective Materials: HVAC unit sold and installed by insured is defective and must be replaced.
$69,000 Faulty Workmanship: Insured installed new equipment on top of building and did not seal flashing properly causing roof to leak.
$60,000 Improper Design: Claim for inadequate design of a digital media recording system installed in claimant's residence.
$57,000 Faulty Workmanship: Insured wired processing plant, switchgear blew up and caused fire at plant.
$50,000 Faulty Workmanship/Design: HVAC system installed by insured is not functioning properly, lack of adequate cooling in many areas of the building.
$42,000 Faulty Workmanship: Insured's completed installation of HVAC system was faulty. It needed to be removed and replaced. The claimant's/tenant's operations are on-hold until repairs can be completed. Business income loss claimed by the tenant of the building.
$36,000 Defective Materials: Insured installed several defective light fixtures from manufacturer in a commercial building. The fixture manufacturer never admitted fault, so we were unable to fully subrogate the loss. The cost to redo the job was $225,000. The manufacturer agreed to supply all of the replacement equipment, so our insured's cost was only their labor.
$25,000 Faulty Workmanship: Insured was electrical contractor on grain dryer project that was completed a year ago. Now a fire occurred at grain dryer site causing extensive damage, including the need to replace the insureds work.
$15,000 Faulty Workmanship: Electrical contractor installed the wrong type of wiring.
$15,000 Faulty Workmanship: Plumbing contractor installed sewer pipe which backed up in the office building.
$14,000 Improper Design: Electrical contractor prepared the design for an intensive care unit at a hospital. They mistakenly omitted electrical receptacles in the design.
$12,000 Faulty Workmanship: Insured installed a heating unit on the roof of a building and it was the wrong unit.
$10,000 Faulty Workmanship: Insured installed thermostats in building and had to go back and change height.
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Aaron Peacock

Aaron Peacock

Hi, I'm Aaron and I'm a marketing representative for Federated Mutual Insurance Company - a Ward's Top 50 and an A.M. BEST A+ Superior rated insurance carrier. After my wife was severely injured in an accident involving a distracted driver, I've found one of my passions in life is to help educate people about the Danger of Distracted Driving and have started speaking to businesses in Western North Carolina on implementing the Federated Insurance DriveS.A.F.E. program. Click here to read more...