While cooking dinner one night, you noticed out of the corner of your eye, a patch of water stain on your ceiling. Oh no! Is there a water leakage upstairs?

After consulting a plumber and a restoration technician, you were told that water has been seeping into the tiles and subfloors of your bathroom for months. This is all because your new toilet installed by a contractor was put in without a gasket!

Any homeowner would undoubtedly feel the frustration of this situation. Unfortunately, there is more bad news, you are likely going to be told by your insurance company that this seepage is not covered by your homeowner’s insurance policy.

Construction defect is one of the common exclusions on homeowners insurance policies.

In many instances, construction defects are discovered by a licensed home inspector during the process of a real estate transaction. Licensd home inspectors have thorough professional knowledge and experience to properly identify construction defects or poor workmanship.

In other instances, construction defects are revealed after the homeowner reports damage and it has been assessed by a professional like a plumber or another contractor.

Your insurance agent has the experience and professional knowledge to advise whether the defects are covered by the insurance company.

If you make a decision to submit a claim for formal coverage review, a claim adjuster will be assigned to perform a comprehensive inspection of the damage. The claim adjuster will examine the damage with an expert of that trade to confirm whether the cause of loss is construction defect.

There are a number of covered perils under a homeowner’s insurance policy, including fire, theft, vandalism, sudden and accidental incidents, etc.

Construction defects are excluded from a homeowner’s insurance policy as a covered risk because they are results of poor workmanship by builders or contractors, not caused by sudden or accidental incidents.

Under some circumstances, the resulting damage caused by construction defects may be covered by your home insurance policy. In these instances, the damages are usually the result of a sudden and accidental event.

Here is an example: You had recently hired a contractor to remodel your bathroom and everything went smoothly. One morning, you walked into your renovated bathroom and discovered that it had turned into an indoor swimming pool overnight. 

The flood damage in your bathroom may be considered sudden and accidental, even if you found out later that the cause of the flood was an incorrectly installed toilet valve.

Keep in mind that your insurance company may cover the flood damage, but it will not cover the cost to repair or replace the toilet valve. The faulty installation will remain as the responsibility of the contractor who was hired for the project. 

The best way to avoid finding yourself in this situation is to only select reputable contractors with a long working history of successful home projects. It is vital to do the proper research on your contractors and verify they are properly licensed and bonded for your projects.

Keep in mind that per homeowner’s insurance contracts, homeowners are not only required to take the necessary measures to upkeep their homes, but also to mitigate further damages when a loss occurs. We recommend that homeowners themselves perform routine inspections of different areas within their home. 

If you discover any issue at all, do not wait to fix it. Find a reliable contractor right away and settle any issue before it morphs into a frustrating nightmare. 

Identifying and mitigating potential issues may not help you avoid builder defects, but they will help you minimize further financial loss.