Survey Error at a Condominium Project

Acknowledgement to XL Environmental

THE CLAIM
A general contractor / construction manager (GC/CM), insured by XL, was hired to construct two condominium towers. The insured subcontracted the surveying work required for the two phases of the project. After the foundations and footings for Phase I were erected, it was discovered that the footprint encroached on Phase II by more than 5 feet. The project owner elected to redesign Phase I, shortening the footprint to allow Phase II to be built with the square footage as designed. It is undisputed that the insured’s land surveying firm made an error which necessitated the redesign and revision of Phase I of the project.

THE RESPONSE
Subcontractors demanded payment for additional work associated with the surveying error and resulting design changes. One small payment from the surveyor’s professional liability policy was made; however, the GC/CM status of additional insured on that policy was not acknowledged by the subcontractor’s insurance carrier. With the consent of XL’s environmental claims department, the insured paid the remaining subcontractors for the additional work to assure that the project progressed without disruption. The owner submitted a claim for delays, additional work, concessions to buyers of affected units in the form of credits, price reductions, and design errors.

THE SOLUTION
XL’s environmental claims attorney worked with the insured to issue payments to subcontractors to prevent future claims. The payments were made under the insured’s Professional and Contractor’s Pollution Legal Liability Policy in the amount of $1 million, ultimately reducing the potential for additional claim costs. The insured kept the project moving, the affected parties paid, and ultimately the owner client satisfied.

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