Source: Beazley, PRO Newsletter, Summer 2014
Facts:
A Beazley insured provided architectural services in connection with the design and construction of a recreational park. A construction defect lawsuit was filed by the project owner, who alleged that our insured did not sufficiently investigate the financial wherewithal of the project contractor and its surety. Moreover, the project owner asserted that our insured approved payments to the project contractor for defective and incomplete work. The plaintiff also pointed to deficiencies in our insured’s design.
Discussion:
The plaintiff in this case – the project owner – was suing for damages in excess of $1 million. A detailed analysis by Beazley’s claims team and defense counsel revealed that this figure was severely inflated. Moreover, the discovery process revealed that the insured had no liability for the damages claimed by the plaintiff. Based on our finding, we mediated the case, attempting to
negotiate a modest settlement based on what we believed to be the actual damages and our insured’s potential exposure. The plaintiff refused to entertain a reasonable settlement. After weighing the risks of going to trial with our insured, we moved the case to the courtroom – where a jury rendered  a verdict in favor of our insured. The project owner did not appeal.
Lessons learned:
Sometimes it pays to persevere: Beazley and our experienced defense counsel are ready and willing to take a case to trial when we believe we have a strong case and that litigating can save our insured money in the long run. Not all insurers have the expertise or wherewithal to take this risk with their insured.