Control risk with the right to cure.(headlines)

One of the best business lessons for subcontractors to learn is to control unquantifiable risks. One example is the "additional insured" requirement in subcontract agreements, which makes the subcontractor liable for any insurable loss attributed to the "additional insured." Many subcontractors have learned about the unpredictable costs of "additional insured" endorsements and aren't around to tell their stories. They learned too late that there are ways of addressing the risks of "additional insured." Another risk that can have unpredictable consequences is defective construction. As with "additional insured" requirements, there are ways subcontractors can address this risk--and live to tell about it.

Claims of defective construction pose unquantifiable risks for subcontractors that do not take steps to control the outcome of claim situations. For example, if a general contractor is free simply to select another subcontractor to remedy defective construction, who knows what the final bill will be for the original subcontractor that is liable?

A white paper published by the American Subcontractors Association (ASA), "Warranty: Right To Cure," explains the construction detect risks that subcontractors contend with in warranty practices, and warranty provisions common in the construction industry. The paper concludes that one of the best ways for subcontractors to control the risks associated with construction defect claims is to preserve their "right to cure":

"One of the most important limits on remedies a construction contractor or subcontractor can implement is recognizable as a cousin of the ...