July hearing will focus on construction defect insurance

Jennifer Robison

Tuesday, April 30, 2002 | 10:58 a.m.

The state's Division of Insurance has scheduled a hearing to discuss what local builders are calling a construction insurance crisis, but builders' representatives say they're concerned because the hearing isn't scheduled until July 1.

"We were a little surprised the hearing would not be until July 1, and we would have preferred it to happen sooner," said Steve Hill, chairman of the Coalition for Fairness in Construction, a group of builders and subcontractors working to address construction defect litigation and insurance issues. "I would certainly think some members of the construction industry will have a problem staying in business until then."

The coalition blames spiraling construction defect cases, which often take years to resolve in court, for the flight out of Nevada of several major insurance companies that no longer cover local builders, subcontractors and other companies involved in the home-building process.

Plaintiffs' attorneys have countered that builders have only themselves to blame for the increase in construction defect cases, which now number about 175 lawsuits locally.

Organizations representing both sides of the issue have said they both plan to take the issue to the state Legislature in its 2003 session.

Parties on both sides will also be at the Division of Insurance hearing July 1, which is scheduled to occur in Carson City at the Legislative Counsel Bureau offices at 401 S. Carson St.

"We hope we can present enough facts for the insurance commissioner (Alice Molasky-Arman) to realize there really is an unavailability of insurance, and we hope the commissioner agrees to put together a joint underwriting association in the same manner she did with the doctors," said Hill of what he hopes the special hearing accomplishes.

Scott Canepa, a plaintiffs' attorney who represents homeowners on construction defect cases, said he'd like to see something different come out of the hearing.

"I'd like to see an understanding that the bad business practices of insurance companies don't mean we need to engage in arbitrary caps on homeowners' rights to recover money to fix their homes," Canepa said.

Canepa said those business practices include retaining numerous defense attorneys for a single case and refusing to settle cases "in a timely manner."