The best way contractors, risk managers and insurers can prevent increasingly complex construction defect claims and litigation is to use loss prevention practices and integrated insurance programs, participants said during a Business Insurance webcast last week.

Experts say recent litigation has policyholders and insurers worried about the potential for liability to expand in construction defect cases.

Construction defects can be “bodily injury and/or property damage resulting from deficiencies in subsurface conditions, design, materials or construction,” Michael R. Szot, executive vp and managing director of Aon Risk Solution's construction services group in Los Angeles, said during the BI webcast “Blueprint for Construction Defects: Managing the Risks and Coverage.”

Mr. Szot said following best practices can mitigate potential claims.

“It all begins with selecting a quality team,” he said, which includes experienced individuals, such as design consultants, general contractors, subcontractors and other services providers who must work well together.

“We believe the greater effort should be put on making sure we don't have claims to begin with,” said Brian Casey, senior vp and head of insurance and risk management for Bovis Lend Lease Holdings Inc. in New York.

Loss prevention practices include peer review during preconstruction, third-party audits during construction, and an established warranty process and complaint hot line once construction is completed, Mr. Casey said. “Most of the residential litigation was really spawned from an inability to respond and inactivity that drove claimants to seek legal counsel,” he said.

Both webcast participants agreed that properly integrating general liability coverage with professional liability coverage, along with structuring owner-controlled or contractor-controlled insurance programs, can help secure compensation if a loss occurs.

BI Senior Editor Michael Bradford moderated the webcast, which is available at www.BusinessInsurance.com/ Webcasts.