If a House Is Damaged Due to the Builders, Who's Responsible?

When you move into a brand new home, you don't expect anything to fall apart as it may in an older home. But houses can be built poorly, and you can experience devastating damage shortly after moving in. If this happens in your brand new New Jersey home, who's responsible?

A New Jersey independent insurance agent can provide insight into this situation and the type of coverage you'd receive from your home insurance. When finding out who's at fault for home damage is complicated, an agent can make sure you're protected in case the responsibility falls on you.

Who’s Responsible for Home Damage to a Brand-New Home?

Home damage can occur in many ways, and how the damage occurred plays a significant factor in determining who is at fault. Not all damage has a clear cause. Whether it's obvious how the damage was caused or not, you'd start by filing a claim with your New Jersey home insurance policy.

If you're certain the damage is a result of the builders or contractors who worked on your home, you could hire an attorney to assist you in a potential lawsuit. However, proving that a contractor was at fault for damage can be tricky and requires clear proof. 

New Jersey, like many states, has warranty laws in place for builders who build new homes. According to New Jersey law, builders must register a new home with the state and warrant each new home and follow warranty follow-up services. State laws and regulations provide limited ten-year warranty coverage against defects of materials, workmanship, and systems in a new home. This means you should check in with your home's warranty to see if you get any coverage there.

After you file the claim with your home insurance carrier, your insurance rep and your independent insurance agent can walk you through the process of getting reimbursed and getting the damage repaired.

Am I Responsible for Covering Any of the Damage?

Unless you can prove that a contractor or a builder caused the damage, you would be responsible for taking care of the damage. The good news is that home insurance is comprehensive, including structural and content coverage, and will likely provide protection in most scenarios. 

You're responsible for the deductible whenever you file a claim with your home insurance. This is something to keep in mind before you file a claim. If the damage is less than your deductible, it's typically not worth filing the claim and paying for the repairs entirely out of pocket.

If you did choose to take legal action against the builder, you'd be responsible for any legal fees associated with that process. 

What Does Homeowners Insurance Cover in New Jersey?

New Jersey homeowners insurance is the same as policies offered across the country. It includes coverage for the home's structure, your personal belongings inside and on your surrounding property, liability claims, and temporary living. 

Major coverages in New Jersey homeowners insurance

• Contents coverage: In the event of a fire, theft, vandalism, severe storm, or other similar events, homeowners insurance will help pay for damage to your belongings like furniture, clothing, electronics, jewelry, silverware, and similar. 
• Structural coverage: The same events that are covered under contents coverage extend to structural coverage, which includes the structure of your home, built-in appliances, garages, and other structures such as sheds. 
• Legal coverage: Homeowners insurance provides liability coverage against lawsuits filed by third parties. This coverage reimburses legal costs like attorney and court fees.
• Additional living expenses coverage: Homeowners insurance covers extra expenses if your home becomes temporarily unlivable after a covered disaster strikes. This coverage reimburses extra expenses like hotel rooms, mileage, meal costs, etc.

What Doesn't Homeowners Insurance Cover in New Jersey?

Home insurance can help you in various scenarios, but some exclusions are important to know in case you're ever faced with damage from one of these events. 

New Jersey home insurance does not cover:

Some of these exclusions, such as flood and earthquake damage and business-related liability issues, can be covered through add-on policies. An agent can work with you to secure additional policies that you may need based on your needs. 

Will My Rates Be Affected Even though I’m Not Responsible for the Damage?

If your insurance company does not end up paying for the repairs, your insurance rates will likely not increase. If you filed a claim and the damage was a high cost to your carrier, you would likely experience a rate increase. However, this is dependent on multiple factors, including your claims history, how the damage happened, who was responsible, and the cost of repairs. 

If you're facing a significant rate increase after a claim, your agent can help you shop for new home insurance coverage that would provide a more affordable policy.

What Kind of Insurance Coverage Does the Builder/Contractor Have?

If you're working with a professional building company, they should be equipped with business insurance. However, many home renovations are done by a handyman who may not have coverage. It's important to ask anyone working on your home what type of insurance coverage they have.

For builders and contractors, an insurance policy may include the following essential coverages.

• Liability insurance: This protects the contractor should they be sued by a client claiming to be harmed by their work. This would be the coverage that would step in if you were to sue your builder for damage to your home.
• Property insurance: This covers the contractor's property, including office equipment, furniture, and any property brought and used at a job site. 
• Business vehicle insurance: This covers any company vehicles that are being used.
• Workers' compensation: This covers any medical bills and lost salary if a worker is sick or injured while on the job.

How Can an Independent Insurance Agent Help?

Unexpected home damage can be devastating and costly. Knowing how to navigate the claims process and determine who is responsible for what can be made easier with a New Jersey independent insurance agent. 

Agents will speak with you, free of charge, to learn about your home and your insurance needs. They'll then work with their network of carriers to compare costs and coverage options for you and help you pick a home insurance policy that protects you from any risks you face.