EDITOR'S NOTE: Presenting sponsors of the 2015 Oklahoma Building Summit & Expo are HUB Insurance, Mid-Continent Group and Grain Dealers Mutual Insurance Company. Summit speaker Tom Cordell is an attorney that Mid-Continent Group utilizes for litigation regarding construction issues. He will be leading a breakout session class 2-3:30 Wednesday, Aug. 26.
Tom Cordell is a partner in the Chickasha law firm Frailey, Chaffin, Cordell, Perryman, Starkel, LLP, and has practiced law with the firm since 1981. The firm is one of the largest non-metropolitan law firms in Oklahoma, yet represents clients statewide from various insurance clients, financial institutions, municipalities and individuals.
Currently president of the Lawyers for Civil Justice, Cordell is active in professional organizations, including the Federation of Defense & Corporate Counsel, the Oklahoma Association of Defense Counsel and has served as chair of the Insurance Section of the Oklahoma Bar Association. Specialties include insurance law, product liability, wrongful death and commercial litigation.
Cordell's presentation at the Building Summit & Expo will cover the topic of "Why Your General Liability Insurance Is Not a Warranty." He recently took the time to answer questions about his upcoming presentation:
Question: What do you plan to address in your breakout session at the Building Summit?
Answer: I end up doing a lot of coverage work on issues that deal with construction defects. What builders seem to believe is their general liability policy is almost like a warranty or a bond. It really isn't, and there really needs to be some more education as to what the general liability policy is for and its purpose and what it does and does not cover.
Q: What is the purpose of a general liability policy?
A: It can be a physical injury or it can be property damage but it has to arise out of an accident. For example, if somebody is up shingling a roof and their foot slips and they hit a package of singles and it falls down and hit somebody on the head or falls down and breaks some equipment or something like that -- that's an accident and would be covered. Normally, these policies don't cover poor workmanship. For example, if a worker comes out and just does a bad job putting on the roof and the roof has to be replaced, there is no accident. There is just poor workmanship and a CGL policy doesn't cover that sort of thing.
But a lot of times builders say "Well I'm covered, I've got insurance." Well, you are covered for accident. If you want to be covered for your workmanship, then you go buy a bond, a performance bond or builders bond or something like that.
Q: How can I protect myself as a builder against poor workmanship?
A: There is a performance bond, and a performance bond is something that guarantees you are going to perform your work in a workmanship like manner and if you don't, then a performance bond is going to step up. Now a lot of times the performance bond companies require almost 100 percent premium. You have to guarantee that you are going to pay for that.
Q: How can General Liability insurance protect a builder in case of accident because of poor workmanship?
A: On poor workmanship, if you are a builder and a roof is put on improperly and it leaks, and when it leaks that causes it gets into sheet rock and the damages cause the sheetrock ceiling to fall down, and it falls down and it breaks a vase on the piano and ruins the rug. Although the replacement of the roof isn't going to be covered by the General Liability policy, it will cover the sheet rock, it will cover the broken vase, it will cover the damage to the piano or the rug. So it will cover certain things, it just won't cover replacement of the poor workmanship. It will cover accidents that occur as a result of the poor workmanship. Those are areas that a lot of people just don't understand, so that's going to be the nature of the presentation, what is and what isn't covered by your CGL policy.