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Construction Defect Litigation and Its Impact on Property Insurance

In this episode of Policy Party, Negar Sharifi and Phil Masi explore the often-overlooked connection between construction defect litigation and community association property insurance renewals. While boards may focus on engineering reports and legal strategy, insurance carriers are evaluating the same defect allegations through a risk lens. When litigation involves building envelope issues, missing firewalls, improper roof installation, or structural deficiencies, carriers may view the property as a higher-risk exposure, even if repairs are planned. Phil explains that carriers worry defects could worsen future losses or increase claim severity. As a result, associations may face fewer market options, higher deductibles, or less favorable terms. Supplemental applications often ask directly about known defects, and failing to disclose active or unresolved issues could create serious complications later. Transparency with your insurance agent is critical before shopping renewals.