Does Your Homeowner's Policy Cover Design Defects?

Construction defects can happen during the building of your home, but they can also occur in the initial planning and design stages. Some design errors can affect your house’s structure, foundation, or ability to resist wear and tear. Defective architectural designs can result in improper drainage that causes flooding or insufficient wiring that leads to fire damage in your home. Attorney Bill Voss explains how to get reimbursed for property damage caused by defective residential designs.

Will Homeowner's Insurance Cover Design Defect Repairs?

It may be challenging to make a homeowner’s insurance claim for property damage caused by architectural defects for a few reasons. First, owners may not realize that the damage was caused by design problems, especially if the damage coincided with a covered event. Second, the effects of a design defect may look similar to those of lack of maintenance, leading an insurance inspector to deny the claim. Third, if someone discovers the defect before it causes damage, there is no covered event, and homeowner’s insurance doesn’t apply.

Homeowners used to be able to file lawsuits directly against contractors for building defects, whether caused by flawed designs, installation, or materials. However, the state legislature enacted Chapter 59 of the Texas Business and Commerce Code in 2021, which states that contractors cannot be held responsible for design defects if the owner – or their consultants – furnished the design or building plans. One exception to the law involves defects discovered by contractors but not corrected during the building process.

Home warranties typically cover home defects, but the protection offered may be limited. These warranties may last five years for existing homes or longer for new builds but are still forms of insurance that must be paid for by the owner.

Making a Claim for Breach of Professional Services Under Chapter 27

Architects and engineers can be held responsible for any defects in their work. You may be able to hold the architect (or, more likely, the architect’s insurer) responsible for residential defects under Chapter 27 of the Texas Property Code. The Chapter 27 Demand is the most critical step in the claims process, which is why having it prepared by an experienced insurance and construction claims attorney is crucial.

Chapter 27 was created to allow builders to repair their work when homeowners and residents are dissatisfied with building construction. It involves a mandatory settlement process between homeowners and contractors, which you must follow to make a valid claim against an architect or engineer. To assert your formal claim for breach of professional services, you must:

• Consult a third-party architect or engineer. You will need a competent professional with similar licensing as the original architect to review the plans, determine the nature of the defects, calculate a cost estimate to correct the deficiencies, and attest that the original design fell below the standard of care.
• Send a formal notice to the architect. The formal demand must explain the building defects and repair costs and include evidence of the claim, such as inspection reports, photographs, videos, and a copy of the building contract.  
• Consider a settlement offer. The architect must send a response, including a potential settlement, within 45 days of receiving the demand. The settlement may include an offer from the engineer to repair the defects personally or to have the defects repaired by an independent contractor at the architect’s expense. If the owner agrees, the agreed party must make the repairs within 45 days of the notice of the offer’s acceptance. If the homeowner rejects the claim and submits a reason why the proposed settlement is unacceptable, the architect has an additional ten days to present a counteroffer. 

Let Us Help You With Your Property Damage Claim

You must bring claims against an architect, engineer, or designer within the state statute of limitations. In Texas, the deadline for filing design defect claims is between two and four years from when the property owner knew or reasonably should have known about the defect. Additionally, the Texas statute of repose gives homeowners a maximum of six years from the date of occupancy to bring a claim for design flaws. The time limits on these claims make it imperative to speak to an insurance lawyer at the Voss Law Firm as soon as possible. Call us at (888) 614-7730 or complete our contact form today to get answers to your questions, or start reading your copy of our free book, Tricks of the Trade: How Insurance Companies Deny, Delay, Confuse, and Refuse.