Neighboring Construction and Excavation

Step-by-step checklist

Identify

• Contact the claim adjuster right away. Ask them to hold the scene and for permission to retain an expert at the client's expense. Note the call in the file.
• On every claim, ask the client whether they want an origin and cause investigator to review the scene, or confirm one is already assigned. Note their answer in the file so the decision is on record.
• Make sure no evidence is touched or moved until the expert has secured the scene
• Get the client's approval for the scene exam cost. Most run at least $1,600 with travel, the day rate, and expenses.
• Identify the project, the property owner, the general contractor, and the excavator
• Build a timeline of the work and when the damage appeared
• Get the building permit number from the city

Hands off until the expert arrives. Nothing at the scene gets touched, moved, repaired, or thrown out until the origin and cause investigator has secured it. Evidence that's moved early can sink the whole recovery.

Notify

• Notify the neighboring owner, the general contractor, the excavator, and the engineer
• Notify their carriers
• Ask for any pre-construction survey of the insured's building

Investigate

• Hold a scene exam with a structural or geotechnical engineer
• Request vibration monitoring records, shoring plans, and dewatering plans
• Check for 811 dig tickets if a utility line was hit
• Find old photos of the insured's building to show its condition before the work

Demand

• Review payments and out-of-pocket costs
• Sort the supports into photos, estimates, invoices, and reports
• Send the full demand packet

Negotiate

• Keep every party on notice until the engineers agree on the cause
• Follow up, and use a tolling agreement if the deadline is close
• If liability is accepted, negotiate. If not, review for ADR or suit.

Settle

• Review the release, and make sure it doesn't free the other contractors
• Receive payment, issue the deductible and client payments
• Final file review, then close

1. Identify

Common losses

Responsible parties to consider

• The neighboring property owner
• The general contractor
• The excavation, foundation, or pile driving subcontractor
• The geotechnical or structural engineer who designed shoring or dewatering
• A utility locating company, if a line was mismarked

Proving the damage is new

The defense will say the cracks were already there. Pre-construction surveys, old listing photos, street view images, appraisals, and the insured's own photos can prove the building's condition before the work began.

2. Notify and investigate

Who to put on notice

• The neighboring owner and the general contractor
• Every subcontractor who dug, drove piles, or ran heavy equipment
• The project engineer
• Their liability carriers

Evidence checklist

• Building permits and approved plans for the neighboring project
• Pre-construction survey of the insured's building, if one was done
• Vibration and settlement monitoring records
• Shoring and dewatering plans
• Daily work logs showing what was done when
• 811 dig tickets and locate marks
• Before and after photos of the insured's building
• Crack monitoring by the insured's engineer

3. Demand, negotiate, and settle

Liability theories

• Negligence in excavation, shoring, or dewatering
• Loss of lateral support. Many states make an excavating neighbor responsible for removing support the land naturally gave the building.
• Strict liability for blasting, and in some states for pile driving
• Trespass or nuisance
• Code violations and violations of city rules that protect nearby buildings

Defenses to expect

Negotiating and settling

• Large projects often have wrap-up insurance covering all contractors. Ask about it.
• Review the release with the release checklist.
• Close with the standard closing letter and the deductible reimbursement letter.

4. Letters for this loss