[Editor's Note: The following content is sponsored by Custard Insurance Adjusters, Inc.]
Are new construction materials creating product liability risks? What are those risks? And finally, what should the claims industry do to prepare?
Q: Are there any industry, manufacturing, or technology trends that you have your eye on as a potential source for future product liability claims or litigation?
Alan Neal, Custard Insurance Adjusters: While attending an industry seminar a few years ago, a well-respected panel of industry veterans opened a discussion about mass timber. The panel raised excellent questions about the manufacturing process, transportation of the finished product, delivery to the intended construction project, and installation of the product. The discussion raised my awareness of the products liability exposure and how a potential failure (if proved) could complicate a construction-defect claim. Would it be considered a product liability claim and could it lead to ensuing damages, raising a potential construction-defect claim?
Cross-laminated timber (CLT) falls into the category of engineered wood. In general, layers of boards are oriented in a perpendicular fashion and glued together with the end result to achieve structural rigidity. The manufacturing standard would follow requirements pursuant to ANSI/APA PRG 320. Panels are prefabricated prior to shipping to preserve and maintain structural integrity. The panels must be protected from the elements. It is then used in the construction of a building.
The following is an example of a baseline claim (fictitious):
A building utilizing CLT is completed
and, years later, ensuing damages are discovered to the building. Through an extensive investigation, supported by consulting engineers and industry experts, the issues are thought to involve CLT. As a claims professional we must trace the issue(s) back to its origins. In order to tender to the appropriate parties, we must systematically attempt to rule out each part of the process. We must ask ourselves numerous fundamental questions (these are not exhaustive):
- Did the site examination and artifacts in the lab examination reveal a failure to follow ANSI standards (noted above)?
- Did the transport company fail to ship the panels according to manufacturer recommendations, rendering the product compromised prior to installation?
- Did the construction tradesman fail to notice obvious deficiencies in the product at the time of receiving the shipment?
- Did the tradesman follow the plans and specifications as designed, meeting applicable building codes?
- Finally, which of these led to the claimed damages?
The claims industry is in its early stages of handling this fascinating subject. It will be interesting to follow this topic of concern as it unfolds (or AI will follow it for us).