Baumgarten of Lee Lumber says that the “only protection” that dealers have now is “adequate insurance coverage,” although that’s getting pricier. Grubbs of Causeway Lumber says his company now pays $70,000 to $80,000 a year in premiums for liabilities ranging from $2 million to $15 million. (It has supplemental coverage for claims that might fall below that level.) Kincaid says his company is self-insured, and the first $75,000 in expenses or claims comes out of its pocket.
Brian Lumber is paying only $795 a year for product liability insurance, but that policy, too, has a high deductible and doesn’t cover ladders, scaffolding, and any items with asbestos. This dealer is also “a lot more careful” about what it carries, says its owner. It no longer stocks fertilizers, for example.
Fesler estimates that installers are at fault “80 percent of the time” in the product liability suits his company has been named in. And Johnson thinks that if H.R. 5500 passes, it could shift the debate toward “proportional” liability and away from “joint and several” liability.
Dealers no doubt would welcome anything that alleviates their risk when installation is involved, although changing customers’ perceptions about who’s at fault when things go wrong won’t be easy. A homeowner in Chicago is withholding payment of $50,000 for cabinets she bought from Lee Lumber because, says Baumgarten, “she was unhappy with the contractor we recommended.” And the owner of a $1 million home in Florida is suing Causeway and the subs Causeway hired to install $28,000 in doors it supplied. Water intruded through some of those doors, which Grubbs says were waterproofed and caulked by a separate team of masons. Grubbs also notes that the contractor had ordered a door with a design not suitable for an area where “the rain comes in sideways.”
At the very least, dealers need to better define their relationships with suppliers and contractors, says Gibson of Indiana Mutual, “so that there’s no-indemnity/hold-harmless language in their purchase agreements.” —John Caulfield is a contributing editor for PROSALES.
