Rising Contractor Liability Claims

Over the past 10 years, investment in both residential and commercial construction has steadily increased. New projects in major urban centers – significantly, Montreal, Ottawa, Toronto and Vancouver – have certainly contributed to this growth. However, repairs and renovations have also made an impact. In 2017, Canadians spent a total of $59.1 billion on home upgrades, with an additional $18.6 billion spent on home repairs.[1] In short, those employed in the trades are being kept very busy. Indeed, the amount of work is fast outpacing the size of the workforce. Perhaps, then, it should come as no great surprise that over the last several years we have noticed a decided uptick in contractor liability claims. Along with a high volume of contractor liability claims, there is also a wide range of different incidents we are called in to investigate involving all different trades. While there are too many to explore in full, there are some common occurrences that adjusters should be aware of and on the lookout for.

Electricians

1. The most common incident we encounter in our investigations involving electricians is the improper installation of wiring or electrical equipment. As one would expect, this can potentially lead to an electrical fire. However, there is another possible outcome. It is perhaps less drastic but no less severe: If wired incorrectly, electrical equipment can sustain serious damage upon being energized. In instances involving commercial and industrial equipment, this can represent a very significant loss.
2. If upon arriving at a job site, an electrician comes across any poor or deficient electrical installations that can be considered a concern or hazard, they should alert the building owner and complete the repair, or, notify the Electrical Safety Authority of this hazardous electrical condition. Not surprisingly, the building owner may not want to incur the cost of additional repairs, and, in an effort to avoid a conflict, the electrician may decide to look the other way. However, if some incident should occur as a result of that deficient installation, the electrician could be on the hook for having failed to do their due diligence.

Plumbers

1. Plumbers occupy a unique place on our list because they can be responsible for both water and fire claims. One common scenario involves improper installation. This could mean installing the wrong component, installing the proper component incorrectly, or using components that are not certified in Canada, are inferior, or just inadequate. The outcome is the same in all instances, the component fails and a water claim ensues.
2. Plumbers are frequently required to work in tight spaces, and that work – soldering copper pipe, for example – often involves the use of plumber’s torch. While they are responsible for taking the proper precautions, like having a fire extinguisher nearby, to say nothing of ensuring that the flame does not come in contact with combustibles, this combination of an open flame and a small space means that plumbers can be liable for a surprising number of fire claims.

Roofers

1. Similar to plumbers, roofers are often required to operate a torch in the course of their trade. When laying down a roof, there are different layers. One of them is a rubber membrane which is rolled out in sheets and sealed together. One way to seal them is with a propane torch. However, there is the danger of the open flame igniting combustible materials that form the roof deck. And although it is mandatory to have fire extinguishers on-site, it simply isn’t always the case, and these fires can quickly get out of hand.
2. Another way to seal the rubber membrane is with hot tar. The tar is heated to a liquid state, pumped up to the roof and spread around using a mop. With this method, there is no danger of an open flame starting a fire, but the mop, if not stored properly, can undergo spontaneous ignition. Usually, the mop is kept in the bucket, encased in tar, or placed somewhere away from combustibles. But, if at the end of the day the mop is left out, particularly on the roof where windy conditions can promote spontaneous heating, it can easily start a fire.

Flooring Contractors

1. Contractor liability claims originating from flooring contractors typically involve the installation of hardwood floors, rather than tile, carpet or laminate. The reason being, when a hardwood floor is either newly installed or refinished, a stain is generally applied at the end. As the stain cures, it gives off certain vapours which are harmless if the contractor has ensured the space is properly ventilated. But if they are allowed to build up, in a basement, for example, a single spark from a gas-fired furnace or water heater can ignite those vapours and start a flash fire.
2. Now, if we shift our attention to the rags used to apply the stain, we find another potential fire hazard. Those stain-soaked rags can be prone to spontaneous heating, which is why they need to be safely disposed of in a metal pail full of water. Contractors who leave them piled up on the floor or put them in garbage bags or a cardboard box are creating a scenario where they can slowly heat up and spontaneously ignite, starting a fire.

Insulation Contractors

1. The type of incident we investigate depends largely on the space and the kind of insulation being installed. Let’s take, as one example, a contractor who is applying blown-in cellulose insulation in the attic of a building: They are working in a space that is very dark and requires them to bring in lighting so they can see what they are doing. Now, if they have, for example, a halogen or incandescent trouble light, and that light comes in contact with the existing insulation or the newly blown-in insulation, the hot surface of the bulb can ignite that material, particularly if it happens to be cellulose. This frequently happens around the attic hatch where the contractor has to lay their light down to climb in and out.
2. Insulation contractors also use spray foam insulation to fill in the ceiling space or wall cavities of a building. The insulation comes out as a liquid and hardens and cures over time. As it hardens and cures, it produces heat. To allow that heat to dissipate, insulation is applied in 2-inch passes (or as specified by the manufacturer) and then allowed to cool. If too much is applied at one time, to a thickness of 5 inches, for example, the insulation at the bottom will produce heat that is unable to escape. At that point, you have the potential for spontaneous ignition.

Challenges

The challenges of investigating contractor liability claims can vary on a case-to-case basis, and certainly, some may be trade-specific. However, there are some prevailing challenges that we face, and two, in particular, stand out: Access to the scene and the preservation of evidence. It goes without saying that evidence is crucial to any forensic investigation and the best way for us to obtain it is at the scene. If we don’t have the opportunity to attend the scene because we are retained months after the fact, there could be an entirely different cause for the incident that we will never be able to determine. At this point, we must rely on evidence that someone else has collected, and so, the preservation of that evidence is of paramount importance. Unfortunately, too often, by the time we are brought in, not only is the scene closed off to us, but we are unable to access the evidence, or even talk to the person who conducted the initial investigation. This makes our job infinitely more difficult. Fortunately, these challenges can be easily circumvented by adjusters retaining the right expert and assigning them quickly.

These have been just a few examples of how contractors can get involved in claims situations, and as you broaden your scope to include additional trades – framers, gas fitters, welders, ironworkers, masons, etc. – you will find countless more. Taking into consideration these numerous sources of potential claims, together with the industry forecast (major infrastructure and energy projects in the pipeline, the continued expansion of our cities and the constant need for home repairs and renovations), it seems likely that we will see more of these types of losses.

Mazen Habash, P.Eng., CFEI, CCFI-C

Mazen is the president of Origin and Cause and specializes in fire investigation, electrical and electronic failures, product liability and alarm system analysis. With over 30 years of experience in the industry, he has performed over 3,000 fire, product liability and alarm system investigations. Mazen is a licensed professional engineer and designated consulting engineer, and is qualified as an expert witness in civil and criminal courts in three provinces. He is also certified at two levels by the Canadian Alarm and Security Association as an alarm technician.

 

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[1] Wilkes, Dave. “As steady renovation industry grows, it needs a standard of excellence.” Toronto Star, Aug. 10, 2018. TheStar.com, https://www.thestar.com/life/homes/opinion/2018/08/10/reno-industry-needs-a-standard-of-excellence.html