Santa Rosa, CA asked in Bankruptcy, Contracts and Insurance Bad Faith for California

Q: Can a general liability insurance policy under a corporation be claimed as an asset in a personal bankruptcy?

We are looking for lawyers who specialize in bankruptcy law and insurance coverage law to help us figure out our situation. In short, we had a contractor building a new custom home for us, abandon our job, file for bankruptcy and move out of state taking money with them that was intended for materials and subcontractors. We contacted their General Liability insurance (which we were named certificate holder on) in an attempt to make a claim to recoup damages for work they did incorrectly that we have to pay to have re-done. Instead we received a reply from the GL's lawyer saying the contractor's insurance policy is an asset in their bankruptcy so they can not help us at this time.

We think this is baloney, but want clarification before we reply back. First off, the contractor filed personal bankruptcy not bankruptcy for their corporation. We were in contract with their corporation and their GL policy was job specific for our job. Any help or advice would be greatly appreciated.

1 Lawyer Answer
William John Light
William John Light
  • Insurance Claims Lawyer
  • Riverside, CA
  • Licensed in California

A: Yes, it's an asset. You need to request relief from bankruptcy to proceed against the limits of the insurance policy. Also, the contractor's insurance policy does not provide coverage for shoddy work. It does provide coverage if your property is damaged by shoddy work, e.g., you have water intrusion due to negligent shingling, a fire from poor electrical work, foundation is cracked due to poor soils preparation, etc. Contact a construction defect attorney.

Yelena Gurevich and David Luther Woodward agree with this answer

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