Assess and Record the Harm
The next step is to identify what damage has actually been done. Not everything that a contractor does is going to rise to the level of property damage. We are hiring people who are experts in their fields, and they may fix areas of our house that have not previously been functioning properly. For example, if you have leaking gutters or downspouts, your roofer may re-route them to keep them from leaking into your basement . If they do this, however, they may create a new leak somewhere else that needs to be addressed. We fail to remember that our house is not perfect and every time we hire someone to work on our house something may get changed, fixed, or improved upon. We need to differentiate what has actually occurred and what we are now seeing. We can do this by taking pictures, and making good notes.
Examine Your Contract
As soon as the property owner notices the damage, they should review their contract with the contractor and/or the general contractor to see what, if anything, the contract says about responsibility for faults and unintentional damages occurring during the construction job.
Most contracts or subcontracts have a clause that limits the liabilities of the contractor; specifically excepting acts of God. However, many provisions also allow for damages where the contractor: 1) negligently or intentionally caused the damages; and 2) sometimes, where the contractor simply failed to exercise a required standard of care; and in certain cases, contractors are liable for the acts of their subcontractors.
The contract will also likely contain a "hold harmless clause" which relieves the contractor of liability for any work they delegate to a subcontractor.
Reach Out to Your Contractor
The next step in this process is to get in contact with the contractor. In an ideal world, when an issue arises concerning damage to a homeowner’s property, the contractor proactively contacts the owner. Unfortunately, in the real world that rarely happens. A homeowner must take the initiative and communicate the issue to the contractor. This step requires diplomacy, teamwork, good faith, and the willingness to resolve the problem amicably. In order to succeed at this step, a homeowner must start preparing before contacting the contractor. Most importantly, prepare the facts: identify where the damage may be, how much damage there is, how the damage occurred and what it is that the contractor can do to fix the problem. It is also extremely important to gather any documents that you have from the contractor regarding the work that was supposed to be done. The more documented evidence you have, the better your chances of a successful resolution of the issue. The primary point of contact should be the contractor’s project manager or general foreman. Avoid making contact through sales staff or others in the office. They are not equipped to help you. Make sure when you do communicate with the company, you talk to someone in a position that can effect the changes that you seek. Finally, speak candidly with your project manager discussing the damage and stressing how this has affected your life. Explain your need to have the problem fixed as soon as possible and express your desire that the problem be resolved amicably. Most importantly, always remain respectful and appreciative. Having spoken with many contractors, they seem to respect and appreciate customers’ thanks and can’t help but want to respond in kind.
Check into Coverage
Check for other policies which cover the loss. Does your homeonwer’s coverage cover damages? Does thecontractor’s insurance cover the damages?
Under the terms of most mortgage and business loan documents, the lender is required to be named on all of the property owner’s policies of insurance. Such a review will reveal who, if anyone, has an insurable interest in the property and may help you locate any available policies.
The injured party must also find out the limits of the insurance policies under which a claim may be made. Investigate whether the contractor has his own liability policy. If so, the injured party should promptly notify the contractor and contractor’s insurer of the claim, so that it may be investigated by the insurance company. The injured party should also investigate whether the contractor has a surety bond that might cover the damages. If the property owner is by contract or by law vicariously liable for the negligent acts of the contractor, then notifying the contractor’s insurer will preserve any benefits which might be available under the contractor’s policy. The insured property owner may also be able to file an additional claim under his own policy to claim his own damages.
Work Towards a Settlement
Negotiating a Resolution: Steps When a Contractor Damages Your Property
Regardless of how the issue occurred, it is often beneficial to (civilly) try to settle the matter amicably before pursuing a more formal disclaimer and extensive damages claim. At this stage, it is best to avoid antagonizing the contractor, as this may hinder future negotiations. If it is determined that the contractor is responsible for the damage, the best approach is to ask him or her to remedy the problem. This could involve a full repair to the damage, such as if a garage door was broken, or to fulfill a duty that was not met, such as if the contractor failed to remove an electrical cord from an area before or during repairs of other property.
You can also seek financial compensation to cover your losses as an option to remedy the situation . However, it is usually uncommon to receive full compensation to remedy the problem, such as if the damage costs $2,000 to fix, you may only be able to recover a portion of that. If the damage was done to a room or area of the home that is not easily converted or changed—like a basement—you might be able to have them pay to remedy the damage, rather than requesting them to fix the damage directly.
Next, you may consider having another professional complete the repair or fix the property. In some instances, it may not be worth spending the time or effort to negotiate with the contractor when they may not be motivated to repair the issue, such as if it is an ongoing issue of neglect or when they repeatedly make similar mistakes.
Consult with a Lawyer
Unless you are skilled at negotiating with contractors, you will probably want to hire an attorney to negotiate a settlement for you. Here are some instances when it’s a good idea to seek some legal advice:
Contractors have contracts drawn up to protect their business in various situations. For example, a contractor may have a waiver stating that they are not responsible if their work results in damage to certain parts of your property. This is something an attorney can help you negotiate and work out with the contractor. For instance, if a contractor is putting a new roof on your home and drops a heavy object on your car, does the contractor have any liability if they state that they are not responsible for damage to your vehicle?
And, contractors get into conflicts with homeowners on a regular basis. You may get into a dispute with your contractor over how much damage they really caused or what steps they need to take to rectify it. You may also need the attorney to step in with the builder’s insurance company about the contractor’s coverage related to the damage they may have caused.
One more important instance to mention here is if the contractor caused serious damage to your home while failing to follow guidelines or completing the job according to building codes. You should definitely get the attorney involved with this kind of situation.
Pursue a Claim or Litigation
If the damage cannot be resolved amicably, there are two more steps in order to get your money. The first step is to file an insurance claim. The second step is to file a lawsuit.
Filing an Insurance Claim
In order to file an insurance claim, you must be able to show proof of damage. You cannot file an insurance claim without being able to prove that there was damage. This is very basic information. The problem is many people either do not think through this process before they file a lawsuit, or simply do not know that you must be able to show proof.
If you have damage and you want your insurance company to pay to fix it, you need to document the damage. Because this is a blog, I cannot give you a checklist of what to take pictures of or how to document everything. But, simply put, if you can document the damage, you should be able to file an insurance claim. If it is a pretty straightforward and obvious claim, you won’t have any problem filing a claim.
Filing a Lawsuit
The next step, if you cannot get a satisfactory answer from an insurance company, is to file a lawsuit. There are two common ways that you will file a lawsuit against a contractor. The first way is a simple breach of contract lawsuit. This is where you have evidence that the contractor breached the contract. You may not have to go through the insurance claims process because you are just filing a lawsuit against the contractor for his error and he should have to pay you out of his own pocket.
Normally, the second type of lawsuit that you will be filing is if the contractor filed a bond with the state of Texas and the amount that you are requesting to be awarded is less that $25,000. You can then request that the bond company pay you out of the bond instead of going after the contractor directly. This is more typical for a Texas Residential Construction, than for a commercial construction project. It is not uncommon for a contractor to be bonded, but it is more common for a contractor to just have insurance.
If you are owed money and you cannot get it resolved by either amicably working out the issues with the contractor, making an insurance claim against your insurance, or filing a breach of contract lawsuit, you will eventually have to hire a lawyer. While there are other options in-between that can potentially be a win-win for both parties, I am not going to go into that here.
Avoid Future Harm
Using reputable contractors and ensuring they have valid insurance is the best ways of protecting yourself should an accident occur. Verifying that any contractors you hire have valid insurance means that you can make a claim against their insurer should they cause damage to your property, rather than attempting to sue them personally. This is because even if a contractor has come to your property in their personal capacity , if they were there as someone who does work on homes, their insurer may accept a claim.
Another preventive measure is to be clear about the work being done and what areas of your property the contractor can access. A reputable contractor should be more than happy to discuss these things with you, and having this discussion before the work begins means that should the worst happen, it is less likely there will be any complex questions over who is responsible.