Insurance Coverage on 558 Notices
Dealing with 558 notices has become a way of life for everyone in the business of construction. And most times, contractors have been able to look to their insurance carriers to cover the costs associated with this time-consuming procedure.
But that could begin to change. In a very recent Florida case, a contractor’s insurance company was able to successfully argue that a 558 notice was not a lawsuit or a proceeding entitled to coverage under that contractor’s applicable policy. Did the 558 process fit the definition of a dispute resolution proceeding? The court determined it did not. Bad news for contractors who aren’t keen on seeing their profit margins further reduced by having to hire lawyers and experts to address the often extensive listing of supposed defects associated with 558 claims.
Contractors would do well to immediately and carefully review their existing policies and determine if coverage is available for dealing with standard 558 notices. They should also consult their construction attorney as there may be ways to deal with these notices which can minimize a contractor’s out of pocket costs, especially if insurance coverage isn’t available.