Hello all,

I am a concrete contractor in Houston and my sub recently saw cut some concrete paving that contains electrical conduit in the bottom 2" or so of 6" paving. I notified my customer and they immediately hired an electrician to fix it and verbally stated they would cover the cost.

The next day he emails me asking if I would do a claim and I said I would look into it. Then, before I respond, he asks me to pay the electrician directly.

My demo sub is telling me to fight it, because they think we are not at fault. Electrical code states conduits under traffic areas should be at 24" minimum.

Now the only person communicating with me from the customer is a company attorney.

Currently, my plan is to reach out to an attorney, present the facts and see if we have a case or if it is just better for me to do a claim.

My deductible is $500 and my insurance would go up approx. 20%, and to talk to a lawyer it's probably in the $200 to $250 range.

Any thought or ideas are helpful.

Y'all take care and have a good one!

Easy.

What does your signed contract state about such issues regarding damage to equipment that is not installed per code?

You can ultimately do whatever you want but you aren't under any obligation to if your contract is good.

You'll need to weigh the long term costs of your decision.

There might be a problem there for me. The customer did not sign my proposal and I did not have language on this proposal about not being responsible for damaging underground piping, conduit, obstructions, etc.

Commercial insurance agent that works with a healthy number of concrete contractors:

Do you use a subcontract agreement with your sub, stating that he is indemnifying you from any damages he causes? If not, you're not alone, as it's a major problem that has led to me adding a number of my now clients. I make sure everyone gets this in place and would recommend you do so. Any future problems will clearly be your sub's responsibility.

Also, a 20% increase in GL over one claim is probably not accurate unless this is going to be a massive cost to fix. I've got a client with two $100k+ claims over the past 3 years, both of which they were not really at fault for. It hasn't ruined their premiums.

Appreciate the response.

I have had them sign a waiver of subrogation in the past, but not this year. $6,237.48 is the amount the electricians will charge the owner for the repair. The cost of the job is $8,893.00.

I don't have any other agreements in place with this sub.

finisher0521 said:

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Appreciate the response.

I have had them sign a waiver of subrogation in the past, but not this year. $6,237.48 is the amount the electricians will charge the owner for the repair. The cost of the job is $8,893.00.

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I won't tell you to claim it or not, but it seems like the only other entity you could hope to pay for it is the city/county, or the contractor that laid the conduit too high, if the city/county can even track that down. I also don't know your premiums, but $6k is nothing on a claims report. Maybe if you have extremely low premiums you'll take a bump, but to most insurance carriers that's just the cost of doing business.

Now if you have 3 or 4 little claims like that, it's going to make you look bad. One isn't a huge deal.

My premium is $108 and some change.

Kind of crazy for your customer to have you pay 6 grand on an 8 grand job. You're essentially paying to work for him.

I am NOT in concrete, obviously, but we do have similar issues in that my crews can poke holes in plumbing and HVAC lines if they are not installed to code and are too close to the decking. I have no way of knowing that in most cases and I have an explicit section in my contract terms and conditions that no one reads but everyone signs. Specifically, if YOUR plumber on YOUR home installed YOUR plumbing or HVAC lines for YOUR systems too close to YOUR deck that my crew pokes a hole in and floods your house or kills your AC....that is completely YOUR PROBLEM to deal with. I am not responsible for it and I have no obligation whatsoever to repair it or cover damages.

However, depending on circumstances, customer interaction, etc, I can certainly chose to help or not. Either way, if I choose to help, under no circumstance does the customer choose the contractor prior to approval and under no circumstances does anything happen without written consent and change orders.

Just moving forward, get someone to help you write clean and solid contracts to prevent you from having issues like this.

I wish you the best of luck, but as far as I am concerned, you owe nothing to anyone. The customer hired the electrician. He's on the hook for the bill, not you. If I were in your place, and a customer did me dirty like that, I would simply blow that off, finish the job, invoice in full, and if they got cute with it, send to collections and file the lien on the property after my signed contracted stipulated period had expired.

Thank you, appreciate all the feedback.

finisher0521 said:

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My premium is $108 and some change.

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If that's $108, then a 20% increase is no big deal and congrats on the cheapest insurance in the world lol

If that's $108k, then a 6k loss will hardly be noticed at renewal

I'm guessing that $108 is monthly, not annually.