Construction defect litigation

In California, construction defect litigation has resulted in a substantial reduction in construction of new multi-family housing. Substantial reliance on litigation to resolve disputes relating to alleged construction defects has contributed to a price/availability problem with respect to contractors liability insurance. In many cases, homebuilders are refusing to participate in new multi-family housing projects because they cannot obtain contractors liability insurance at a reasonable cost for these projects. The result has been a shortage of affordable housing, particularly in major urban areas. This construction defect litigation is examined, and insurance price and availability implications are discussed. A case is made for the enactment of the California Homebuyer Protection and Quality Construction Act.