Right to Repair Unintended Utilization

Advise & Consult, Inc.

Right to Repair” is a trend, that while becoming an increasingly popular option given that property insurance policies include wording giving insurers this power.  Unfortunately, while becoming more common, and while the provision sounds like a good idea in theory, is not being utilized by insurers in the way that was intended.

Digging deeper into right to repair provisions and the effect they can have on other coverages in property insurance policies, Carter Bess of the Merlin Law Group, gives us a taste of what policyholders can expect if they use this provision.  In a blog post, Right to Repair: How People’s Trust Insurance Company’s Preferred Contractor Endorsement Leaves Policyholders Over a Barrel, calls this a get-out-of-jail-free-card for the insurance companies.

For quite some time now, the standard HO 3 language in a residential homeowners insurance policy has had “Our Option” language in the conditions section towards the end of the coverage for section I:

Our Option. We may repair or replace any part of the property damaged or stolen with similar property within 30 days after receipt of your signed, sworn proof of loss. Any property we pay for or replace becomes our property.

In the past, insurers have rarely used this condition.  Now, however, evolving language has created a nightmare for policyholders.  Citizens, Avatar, and People’s Trust are some of the major players taking advantage of this program, as their policies will have a slightly different “Our Option” condition language:

Our Option
At our option:
1. For losses settled on an actual cash value basis, we may repair or replace any part of the damaged property with material or property of like kind and quality.
2. For losses covered under Coverage A – Dwelling, insured for Replacement
Cost Loss Settlement as outlined in SECTION I – CONDITIONS, Loss Settlement, we may repair the damaged property with material of like kind and quality without deduction for depreciation.
3. We will provide written notice to you no later than thirty (30) days after our inspection of the reported loss.
4. You must comply with the duties described in SECTION I – CONDITIONS, C. 7 and 8.
5. You must provide access to the property and execute any necessary municipal,
county or other governmental documentation or permits for repairs to be undertaken.
6. You must execute all work authorizations to allow contractors and related parties entry to the property.
7. You must otherwise cooperate with repairs to the property.
8. You are responsible for payment of the deductible stated in your Declarations page.
9. Our right to repair or replace, and our decision to do so, is a material part of this contract and under no circumstances relieves you or us of our mutual duties and obligations under this contract.

This option has become carefully crafted by insurance company underwriters, where the option was rarely used is now being invoked at each available opportunity to disclaim liability now or in the future.

A scenario posed by Carter in his previous post was the following:

An insured property suffers a loss as a result of a fire. People’s Trust sends out an adjuster to estimate the loss, but ultimately prepares an estimate for damages to the dwelling that is insufficient to restore the insured property back to its pre-loss condition. People’s Trust then notifies the policyholder that it is extending coverage in the amount of the estimate and that it is invoking its right to repair under the Preferred Contractor Endorsement.

The policyholder advises People’s Trust that he or she does not agree with the amount of the loss. People’s Trust then requests a Sworn Proof of Loss and invokes the policy’s appraisal provision shortly after. The policyholder submits an executed Sworn Proof of Loss and supporting estimate, but People’s Trust rejects the Sworn Proof of Loss and informs the policyholder that any valuation dispute will be addressed through the appraisal process.

The party’s appraisers ultimately enter an appraisal award for more than twice the amount People’s Trust initially paid on the claim. People’s Trust then sends the policyholder a “work authorization” form that authorizes the “preferred contractor,” Rapid Response Team, to perform repairs according to the amount of the appraisal award. The policyholder then signs the work authorization and complies with all other conditions stated in the policy in order for the loss to be paid and repairs to begin.

Whereas Carter’s post then dealt with this provision’s conflict with other language dealing with a policyholder’s non-salvageable contents, this blog will address another scenario: the faulty workmanship exclusion.

One of the most common exclusions, which will be found in almost every homeowner’s insurance policy, is the faulty workmanship exclusion.


A. We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area.

12. Existing Damage

a. Damages which occurred prior to policy inception regardless of whether such damages were apparent at the time of the inception of this policy or discovered at a later date; or

b. Claims for damages arising out of workmanship, repairs or lack of repairs arising from damage which occurred prior to policy inception. However, any ensuing loss arising out of workmanship, repairs or lack of repairs, caused by a Peril Insured Against, to property described under Section I – Property Coverages, is covered unless the loss is otherwise excluded in the policy.

But that is not the only place you will find it. The example policy provision quoted above puts another workmanship-related provision in the section directly after section A:

B. We do not insure for loss to property described in Coverages A and B caused by any of the following. However, any ensuing loss to property described in Coverages A and B not precluded by any other provision in this policy is covered.

1. Weather conditions. However, this exclusion only applies if weather conditions contribute in any way with a cause or event excluded in A. above to produce the loss.

2. Acts or decisions, including the failure to act or decide, of any person, group, organization or governmental body.

3. Faulty, inadequate or defective:

a. Planning, zoning, development, surveying, siting;

b. Design, specifications, workmanship, repair, construction, renovation, remodeling, grading, compaction;

c. Materials used in repair, construction, renovation or remodeling; or

d. Maintenance; of part or all of any property whether on or off the “residence premises.”

Both of these provisions are similar – any damage performed prior to the policy inception is not covered and any faulty workmanship after the covered loss occurs, then the damage will not be denied as excluded – this is “ensuing loss” arising out of workmanship.  Just because it is not excluded does not mean the insurance company will not increase the estimated value of your covered loss by a substantial sum.

“Policy inception” can and will often be, interpreted to be the date in which the policy begins, even upon renewal.  Here is an example:

Picture significant roof and interior property damage due to a hurricane suffered by a policyholder.  This policyholder has a Right to Repair provision in their policy, allowing the insurer to assign its preferred contractor to fix the damages instead of paying out benefits.  Their preferred contractor, however, is bogged down with hundreds of other claims, delaying repairs.  This contractor finally arrives at the property but isn’t given their full attention or time due to their busy schedule and their need to get to other homes.

Once the contractor leaves, the insurance company notifies the policyholder that the claim is now closed.  The policyholder trusts that the insurance company and the contractor assigned to their claim has provided satisfactory efforts in repairing the damages that has enabled the insurance company to close the claim.

After about a year and a half, this same policyholder’s home has a burst pipe in the kitchen – which overlaps with some of the previous damage from the hurricane.  The insurer sends out an adjuster whose inspection concludes that the overlapping damaged areas points directly back to the shoddy work done by the contractor and denies a portion of the claim.

You are not alone if you find this to be a more than a little messed up.  The preferred contractor – hired by the insurance company – was someone who contributed to the damage of the property and because the damage happened in a policy period AFTER the damage from the hurricane, affects the policyholder’s claim.  So, of course, they are “preferred” if they can be used like this.

The more that these Right to Repair provisions are included in homeowner’s policies, the more the insurance companies will take advantage of them.  This is why these policies need to evolve, so that these claims don’t continue to be manipulated, mishandled, and used for the advantage of the insurer.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.

Florida’s Fourth District Appeals Court Clarifies What Actions Satisfy Florida’s Construction Defect Statute of Repose

Rahul Gogineni | The Subrogation Strategist | October 29, 2018

In Gindel v. Centex Homes, 2018 Fla.App. LEXIS 13019, Florida’s Fourth District Court of Appeal recently concluded that the date on which the plaintiffs provided a pre-suit notice in compliance with §558.004 of Florida’s construction defect Right-to-Cure statute, Fla. Stat. §§ 558.001 to 558.005, et. seq., is the date on which the plaintiff commenced a “civil action or proceeding,” i.e.an “action,” within the meaning of Florida’s construction defect statute of repose, Florida Statue § 95.11(3)(c). Thus, reversing the decision of the trial court, the Fourth District held that the plaintiffs timely-filed their construction defect action against the defendants.

The Gindel case arises from the allegedly defective construction of a group of homes by Centex Homes. On March 31, 2004, Mr. Gindel (the lead plaintiff) as well as the other homeowners (hereinafter collectively referred to as either “plaintiffs” or “homeowners”) took possession of their homes. After discovering an alleged construction defect, the homeowners provided a pre-suit notice of defect to Centex on February 4, 2014. After being notified that Centex would not cure the defect, the homeowners filed suit on May 2, 2014, against Centex and its subcontractor, Reliable Roofing and Gutters, Inc. Upon motion, the district court dismissed the case against Centex, finding that: (1) Florida’s 10-year statute of repose applied; and (2) the plaintiffs failed to bring their action within 10 years of taking possession of their homes.

Statute of Repose

In the United States, almost all states have adopted a statute of repose in connection with improvements to real property. Similar to a statute of limitations, a statute of repose imposes a time limitation within which a plaintiff has to file suit. However, a statute of repose is different from a statute of limitations in that it can start to run even before the plaintiff’s claim arises. Accordingly, a plaintiff’s claim may be barred by a statute of repose before the plaintiff is even aware of the latent construction defect giving rise to the plaintiff’s claim.

In Florida, there is a 10-year statute of repose for claims brought in connection with an improvement to real property. Under § 95.011 of the Florida Statutes, “[a] civil action or proceeding, called “action” in this chapter… shall be barred unless begun within the time prescribed in this chapter.” That time is further defined in §95.11(3)(c) of the Florida Statutes, which states:

An action founded on the design, planning or construction of an improvement to real property… must be commenced within 10 years after the date of actual possession by the owner, the date of the issuance of the certificate of occupancy, the date of abandonment of construction if not completed, or the date of completion or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer, whichever date is latest.” (Emphasis added).

In overturning the lower court’s decision, the appellate court concluded that, by including both “civil action” and “proceeding” within the definition of the term “action,” the statute contemplated that more than the filing of a civil action would satisfy the time requirement for the Statute of Repose. It further concluded that, because the Right-to-Cure statute, §558 of the Florida Statutes, sets out a series of mandatory steps that must be taken prior to bringing a judicial action, it sufficiently constituted an “action” for purposes of Florida’s Statute of Repose. Accordingly, the appellate court found that the plaintiffs, through their pre-suit notice sent on February 4, 2014, brought their “action” against Centex within 10 years of taking possession of the property. Thus, the court held that the plaintiffs were not time-barred from bringing their claims in a subsequent civil action.

This case serves as a good reminder to review the applicable statute of repose for any possible exception that may apply to your case. Additionally, it should be noted that some jurisdictions have “Right-to-Cure” statutes, which should also be reviewed prior to bringing litigation related to a construction defect.

Post-Opinion Motions

As of this writing, the parties have filed post-opinion motions related to the case, including a motion to certify the matter for appeal to Florida’s Supreme Court. Thus, the precedential value of the case, whether in the Fourth District or in other Florida appellate districts, is subject to change. Accordingly, until the Supreme Court of Florida addresses this issue, subrogation practitioners should contemporaneously file both the pre-suit notice required by Florida’s Right-to-Cure statute and a civil suit in the appropriate court. To the extent that the defendant contends that the suit is premature, a court should, pursuant to Florida Statute § 558.003, stay the suit to allow the parties time to comply with the Right-to-Cure statute.

The “Right to Repair” Construction Defects in the Rocky Mountain and Plains Region

Jean Meyer and Sheri Roswell | Higgins, Hopkins, McLain & Roswell, LLC | September 25, 2018

In excess of 30 states have enacted tort reform legislation requiring property owners to notify construction professionals of the presence of alleged construction defects prior to the commencement of a lawsuit. These statutes also often permit construction professionals to make an offer of repair within a statutorily defined period of time after receipt of a notice of claim letter. Undoubtedly, the notice-of-claim process has played a meaningful part in bringing construction professionals and claimants to timely resolutions of construction defect concerns in isolated instances.

However, while these statutes are commonly referred to as “right to repair” legislation, their practical effect is often reduced to little more than procedural empty gestures serving as a prelude to litigation. This article will briefly survey the “right to repair” statutes in Colorado, Montana, North Dakota and South Dakota. In Nebraska, New Mexico, Utah and Wyoming there is no right to repair or notice-of claim statue.


Pursuant to C.R.S. § 13-20-803.5, the “right to repair” process begins when a property owner delivers a “notice of claim” letter to the construction professional. The construction professional then has 30 days to inspect the property, according to C.R.S. § 13-20-803.5(2). Upon completing the inspection, the construction professional has an additional 30 days to offer to settle the alleged construction defects by means of payment or by offering to remedy the alleged construction defects through remedial work. “A written offer to remedy the construction defect shall include a report of the inspection, the findings and results of the inspection, a description of the additional construction work necessary to remedy the defect described in the notice of claim and all damage to the improvement to real property caused by the defect, and a timetable for the completion of the remedial construction work” as stated in C.R.S § 13-20-803.5(3).

However, an owner is under no obligation to accept a construction professional’s offer of monetary compensation or repairs, regardless of how reasonable it may be based on C.R.S § 13-20-803.5(6). Recognizing the practical reality that the “right to repair” exists in name only for Colorado construction professionals, Colorado’s legislature introduced House Bill 17-1169 on February 6, 2017. HB 17-1169 would have statutorily permitted construction professionals to perform repairs in response to a notice of claim letter. In the words of the bill: “[i]f the Construction Professional [were to give] notice of an election to repair the defect in accordance with [the statute], the Claimant shall provide the construction professional with unfettered access to the subject property as necessary to correct the construction defect. . .” Unfortunately, on March 1, 2017, Colorado’s House Committee elected to postpone any vote on HB-1169 indefinitely.

In sum, in Colorado, construction professionals have the right to offer to make a repair. Owners have no obligation to accept a construction professional’s offer of repair.


Montana’s construction defect statute is substantially similar to that of Colorado’s. Specifically, M.C.A. § 70-19-427 requires a residential homeowner to serve a written notice of claim on the construction professional prior to the commencement of a lawsuit. The notice of claim must state that the homeowner is asserting a construction defect claim against the construction professional and must describe the claim in reasonable detail. Thereafter, the construction professional has 21 days to respond to the homeowner by proposing an inspection of the property, offering to compromise or settle through a financial settlement or repair, or denying liability. As with Colorado’s statute, the homeowner is under no obligation to accept a construction professional’s offer.

Additionally, M.C.A. § 70-19-427(3)(b) allows the homeowner to reject the inspection proposal. Nevertheless, if the homeowner elects to allow the construction professional to inspect the property, within 14 days following the completion of the inspection, the construction professional is obliged to provide the homeowner with an offer to compromise via a monetary payment, a written offer to remedy the claim through a combination of repair and monetary payment, or a written statement setting forth the reasons why the construction professional will not proceed to remedy the alleged defect. The homeowner must then, within 30 days, accept or reject the construction professional’s proposed resolution. If the homeowner rejects the offer of repair or settlement presented by the construction professional, the homeowner must serve written notice of the homeowner’s rejection to the construction professional. After delivery of the homeowner’s rejection of the proposed settlement, the homeowner is free to commence a lawsuit against the construction professional.


North Dakota’s statutory construction defect notice and offer of repair requirements are unique compared to the foregoing states. Specifically, N.D.C. § 43-07-26 precludes residential homeowners from undertaking any repair, other than emergency repairs, or commencing a lawsuit prior to providing notice to the construction professional of the alleged defect. Thereafter, “within a reasonable time after receiving the notice, the contractor shall inspect the defect and provide a response to the purchaser or owner, and, if appropriate, remedy the defect within a reasonable time thereafter,” according to N.D.C. § 43-07-26. Compared to the language of the other states examined in this article, North Dakota has, by far, the most favorable statutory regime for construction professionals. The homeowner must allow the construction professional to inspect the property and the construction professional is actually afforded the “right to repair.”


Pursuant to S.D.C.L. § 21-1-16, South Dakota maintains a statutory regime requiring residential homeowners, prior to commencing an action, to serve a written notice on construction professionals setting forth the alleged construction defects present at the property. Additionally, the statute requires that the residential homeowner allow the construction professional to inspect the property within 30 days after service of the notice and allow the construction professional to make a written offer to repair or an offer of monetary settlement. While the homeowner is under no obligation to allow the construction professional to perform the repair offered, if any, the homeowner is required to wait until 30 days after the notice of claim is served on the construction professional or until the construction professional refuses to remedy the alleged construction defect prior to commencing suit.


The statutory right to repair for construction professionals is often an illusory remedy under the current statutory framework. While the legislative intent in enacting construction defect reform statutes was presumably to streamline construction defect litigation, these right to repair provisions are often rendered ineffective as a result of property owners’ ability to refuse reasonable repairs.

Policyholder Must Pay Deductible When Insurance Company Invokes Right to Repair a Partial Loss

Ashley Harris | Property Insurance Coverage Law Blog | May 1, 2018

Recently, the Second District Court of Appeal affirmed the dismissal of a class action against Omega Insurance Company in which the policyholders asserted that Omega improperly required them to pay a deductible when Omega invoked its right to repair the property.

In Ganzemullers v. Omega Insurance Company,1 the policyholders suffered hail damage in March 2016 and filed a claim with their insurance carrier. Omega acknowledged coverage and invoked its right to repair the property under the policy. The policyholder was required to pay their $1000 deductible to the contractor. The policyholders then filed a class action contending that Florida law precludes the insurance carrier from requiring the payment of the deductible when the insurance carrier elects to repair a partial loss.

The policyholder argued that even though the policy may require payment of a deductible, once the insurance carrier elects to repair damaged property, whether the loss is total or partial, Florida Statute §§ 627.702(7) and 627.7011(5)(e) preclude the insurance carrier from requiring payment of the deductible.

Subsection 627.702(1) specifically deals with total losses, and subsection (7) addresses the insurance carrier’s right to repair without contribution by the insured “in lieu of any liability created by subsection (1).” These subsections preclude the insurance carrier from requiring the policyholder to make any contribution when the insurance carrier elects to make repairs in total loss situations. The parties did not dispute that deductibles are covered by the “without contribution” language.

Ultimately, the appellate court found that nothing in the statutory language suggested a statutory intent to eliminate policy deductibles for partial losses as well as total losses where the insurance carrier elects to make repairs. For this reason, the court affirmed the dismissal of the policyholders’ class action.
1 Ganzemullers v. Omega Ins. Co., No. 2D17-1284, 43 Fla. L. Weekly D948e (Fla. 2d DCA April 27, 2018).

Gillotti v. Stewart (2017) 2017 WL 1488711 Rejects Liberty Mutual, Holding Once Again that the Right to Repair Act is the Exclusive Remedy for Construction Defect Claims

Richard H. Glucksman, Esq. and Chelsea L. Zwart, Esq. | Construction Defect Journal | June 5, 2017

In Gillotti v. Stewart (April 26, 2017) 2017 WL 1488711, which was ordered to be published on May 18, 2017, the defendant grading subcontractor added soil over tree roots to level the driveway on the plaintiff homeowner’s sloped lot. The homeowner sued the grading subcontractor under the California Right to Repair Act (Civil Code §§ 895, et seq.) claiming that the subcontractor’s work damaged the trees.

After the jury found the subcontractor was not negligent, the trial court entered judgment in favor of the subcontractor. The homeowner appealed, arguing that the trial court improperly construed the Right to Repair Act as barring a common law negligence theory against the subcontractor and erred in failing to follow Liberty Mutual Insurance Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 98. The Third District Court of Appeal disagreed and affirmed the trial court’s judgment in favor of the subcontractor.

This is the second time the Third District Court of Appeal has held that Liberty Mutual (discussed below) was wrongly decided and held that the Right to Repair Act is the exclusive remedy for construction defect claims. The decision follows its holding in Elliott Homes, Inc. v. Superior Court (Hicks) (2016) 6 Cal.App.5th 333, in which the Court of Appeal held that the Right to Repair Act’s pre-litigation procedures apply when homeowners plead construction defect claims based on common law causes of action, as opposed to violations of the building standards set forth in the Right to Repair Act. Elliott is currently on hold at the California Supreme Court, pending the decision in McMillin Albany, LLC v. Superior Court (2015) 239 Cal.App.4th 1132, wherein Liberty Mutual was rejected for the first time by the Fifth District. CGDRB continues to follow developments regarding the much anticipated McMillin decision closely, as well as all related matters.

The Right to Repair Act makes contractors and subcontractors not involved in home sales liable for construction defects only if the homeowner proves they negligently cause the violation in whole or part (Civil Code §§ 911(b), 936). As such, the trial court in Gillotti instructed the jury on negligence with respect to the grading subcontractor. The jury found that while the construction did violate some of the Right to Repair’s building standards alleged by the homeowner, the subcontractor was not negligent in anyway. After the jury verdict, the trial court found in favor of the grading subcontractor.

The homeowner moved for a judgment notwithstanding the verdict or a new trial on the grounds that the trial court improperly barred a common law negligence theory against the grading subcontractor. The trial court denied the motions on the grounds that “[t]he Right to Repair Act specifically provides that no other causes of action are allowed. See Civil Code § 943.” The trial court specifically noted that its decision conflicted with Liberty Mutual, in which the Fourth District Court of Appeal held that the Right to Repair Act does not eliminate common law rights and remedies where actual damage has occurred, stating that Liberty Mutual was wrongly decided and that the Liberty Mutual court was naïve in its assumptions regarding the legislative history of the Right to Repair Act.

In Gillotti, the Third District Court of Appeal stated that the Liberty Mutual court failed to analyze the language of Civil Code § 896, which “clearly and unequivocally expresses the legislative intent that the Act apply to all action seeking recovery of damages arising out of, or related to deficiencies in, residential construction, except as specifically set forth in the Act. The Act does not specifically except actions arising from actual damages. To the contrary, it authorizes recovery of damages, e.g., for ‘the reasonable cost of repairing and rectifying any damages resulting from the failure of the home to meet the standards….’ ([Civil Code] § 944).”

The Court also disagreed with Liberty Mutual’s view that because Civil Code §§ 931 and 943 acknowledge exceptions to the Right to Repair Act’s statutory remedies, the Act does not preclude common law claims for damages due to defects identified in the Act. The Court stated: “Neither list of exceptions, in section 943 or in section 931, includes common law causes of action such as negligence. If the Legislature had intended to make such a wide-ranging exception to the restrictive language of the first sentence of section 943, we would have expected it to do so expressly.”

Additionally, the Court of Appeal rejected the argument that Civil Code § 897 preserves a common law negligence claims for violation of standards not listed in Civil Code § 986. It explained that the section of Civil Code § 897, which provides, “The standards set forth in this chapter are intended to address every function or component of a structure,” expresses the legislative intent that the Right to Repair Act be all-encompassing. Anything inadvertently omitted is actionable under the Act if it causes damage. Any exceptions to the Act are made expressly through Civil Code §§ 931 and 934. The Court concluded in no uncertain terms that the Right to Repair Act precludes common law claims in cases for damages covered by the Act.

The homeowner further argued that she was not precluded from bringing a common law claim because a tree is not a “structure,” and therefore the alleged tree damage did not fall within the realm of the Right to Repair. The Court of Appeal also rejected this argument, holding that while the tree damage itself was not expressly covered, the act of adding soil to make the driveway level (which caused the damage) implicated the standards covered by the Right to Repair Act. The Court explained that since under the Act a “structure” includes “improvement located upon a lot or within a common area” (Civil Code § 895(a)), as the driveway was an improvement upon the lot, the claim was within the purview of the Right to Repair Act. As the soil, a component of the driveway, caused damage (to the trees), it was actionable under the Act.