If you or your construction company have ever been sued, you know it can be a stressful time. You have deadlines, you have subcontractors clamoring to get paid or defended, and it’s a generally awful situation. But, keep your mind on the prize–to make sure you have insurance coverage that will provide a defense to these claims. The most important step to ensure you have coverage is to tender your defense. But, how you tender the claim to the insurer will impact the outcome, ranging from acceptance of the claim to denial. Here are some tips to help tendering your defense.
Who Do I Send the Tender To?
Generally speaking, you will want to tender the defense of the claim to all your insurers, most importantly the Commercial General Liability carrier. If you are an Additional Insured under your subcontractors’ insurance policies, you will also want to tender to those carriers. But, you will need to assess whether each particular subcontractor was involved in the underlying claim.
What Should the Tender Say?
Remember, your goal is to find as much coverage as possible, so cast the net widely. You will want to draft, or get help drafting, the tender letter to make it appear with certainty that the claim is covered. The adjuster who reviews the tender will have two choices: (1) accept the tender; or (2) send the tender to counsel for an opinion as to whether insurance coverage is available. The better the tender letter, the more likely the adjuster is to accept the tender.
When Should I Tender?
As soon as possible. Every penny that you pay for an attorney to defend your claim is a penny you’ve lost. The insurer will most likely not pay for legal fees incurred done before the tender.
Helpful Hints on the Tender Letter
- If you are writing to several insurers, make sure you are tailoring the letter to that insurer’s coverage. Don’t send the same tender letter to all insurers.
- Keep the tender as simple as possible and attach the claim.
- Make sure you ask only that the insurer accept defense of the claim. Don’t ask the insurer whether the claim is covered. Assume that there is coverage and that you are simply passing it on for handling.
Take Away: Getting sued on a construction project can be a stressful situation. Don’t add to the stress by failing to tender your defense to your insurer.