A Video Explaining the Consideration for Early Settlement of a Construction Defect Suit

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Considerations for Early Settlement

See the full video at https://youtu.be/uj04AxGJ41U

It is an axiom followed by almost every attorney that the sooner a suit is settled the less it will cost the defendants. Invariably as suits drag on, as discovery is received and analyzed, the positions of the parties become less amenable to compromise. If defendants and their counsel believe that liability against the defendant is reasonably clear, they should work to bring the parties together to attempt an early settlement. Some of the reasons for the early settlement are discussed below.

Adverse Publicity

The reputation of a builder, developer, engineer, or architect can be destroyed by adverse publicity. Wide dissemination of a single charge of negligent construction can cause the person charged to lose business. Early settlement, if appropriate, can eliminate the concern for the damages caused by adverse publicity. Preferably, settlement should be reached before suit is filed and appropriate language in the settlement agreement should make the settlement confidential. The confidentiality agreement should include an agreement to pay liquidated damages (a damage amount set in the settlement agreement) to the other party if breached.

Court Imposed Terms or Sanctions

Bad Facts and Serious Injuries

Legal Issues

Multiple Claims

If the loss is such that paying all claimants what they want would exhaust the limits of the insured’s policy, the insurer, before effecting any settlement, should do the following:

  • advise the insured of the limits available and that the claims may exceed these limits;
  • advise the insured that he or she has the right to obtain, at his or her expense, independent counsel to advise of the exposure the accident has caused to his or her assets; and
  • advise each claimant, and their counsel, of the limits available.

© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

https://zalma.com/zalmas-insurance-fraud-letter-2/Read last two issues of ZIFL here. 

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