2026 Top Business Risks for Construction and Engineering Companies
May 26, 2026 —
Darren Tasker - Construction ExecutiveThe 2026 Allianz Risk Barometer revealed some surprising findings for construction and engineering businesses. Now in its fifteenth year, this
annual business risk ranking by corporate insurer
Allianz Commercial incorporates the views of 3,338 global risk management professionals on the main perils on their radar for the year.
Survey respondents included construction and engineering risk experts who identified the threats keeping them up at night. Here is how they ranked the top industry risks for 2026:
Natural Catastrophes
Natural catastrophe risk retains the top spot, with 38% of construction and engineering respondents citing this risk as their leading concern for 2026. From the insurance perspective, economic and insured losses remained high, albeit lower than the 10-year average. The evolving nature of natural catastrophes continues to pose significant challenges to businesses and the (re)insurance industry. Insured losses from natural catastrophes are set to reach $107 billion for 2025, according to Swiss Re—the sixth year in a row they have exceeded $100 billion, while economic losses are well in excess of $200 billion.
Reprinted courtesy of
Darren Tasker, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Bad Faith Claim Survives Summary Judgment
June 08, 2026 —
Tred R. Eyerly - Insurance Law HawaiiThe court denied the insurer’s motion for partial summary judgment on the insured’s bad faith claim, but granted the motion on the insured’s claim for punitive damages. Serbian Orthodox Church v. Brotherhood Mut. Ins. Co., 2026 U.S. Dist. LEXIS 58234 (S.D. Cal. March 19, 2026).
On February 1, 2023, the Church filed a claim for water damage with Brotherhood Mutual Insurance Company (BMIC). The claim was based on rain and wind that caused extensive water intrusion into the Sanctuary, damaging its plaster walls and ceilings and fresco paintings. The claim was assigned to Patrick Hurley. Hurley sent a letter discussing potential bars to coverage and requesting further information and documents from the Church.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Leaders in Dispute Resolution Need to Make Unbiased Decisions for Mediation to Succeed
March 31, 2026 —
Rick G. Erickson - Snell & WilmerAs a mediator helping to settle construction disputes and as an arbitrator deciding outcomes of these disputes, I found certain lessons to be especially helpful after graduating last summer from the Executive Education program at Harvard Kennedy School (HKS). The exceptional HKS curriculum included courses focused on negotiation strategies for multiparty disputes, decisive leadership during crisis, and human behavior affecting dispute resolution.
In particular, our HKS class debated the impact of cognitive bias in dispute resolution, and we studied a central theme that decision-making is universally scientific. That is, parties making decisions in dispute resolution exhibit and rely upon empirical factors that good mediators and decision makers should appreciate and understand. Bias, for example, can cause key players to discount persuasive witnesses, admissible evidence, and reliable expert opinions that influence the outcome of a construction dispute. Biased decision makers may also choose to withhold key information from the mediator, as though doing so will help rather than hurt what is supposed to be an objective and diplomatic process.
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Rick G. Erickson, Snell & WilmerMr. Erickson may be contacted at
rerickson@swlaw.com
Alert: Fraudulent Notice of Nonpayment Defense Applies to Payment Bond Claims
April 27, 2026 —
David Adelstein - Florida Construction Legal UpdatesUnder Florida’s Lien Law, there’s an affirmative defense or affirmative claim known as a “
fraudulent lien.” The fraudulent lien defense or claim is set out in Florida Statute s. 713.31. This defense also extends to payment bond claims, whether under a private statutory payment bond (Florida Statute s. 713.23) or a public payment bond (Florida Statute s. 255.05), as it pertains to the notice of nonpayment. A notice of nonpayment needs to be served within 90 days from final furnishing to preserve a claimant’s rights against the bond. However, there really has not been a case, until now, that discusses a “fraudulent notice of nonpayment.”
In K&M Electric Supply, Inc. v. Brown Electrical Solutions, LLC, 51 Fla.L.Weekly D672a (Fla. 4th DCA 2026), a prime contractor and surety prevailed at the trial level on their fraudulent notice of nonpayment defense based on a supplier’s notice of nonpayment and action against a public payment bond (under Florida Statute s. 255.05).
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David Adelstein, Kirwin NorrisMr. Adelstein may be contacted at
dma@kirwinnorris.com
Turnover Traps for Community Associations: Investigate First, Release Claims Later
April 14, 2026 —
Nicholas B. Vargo - Ball Janik LLPTurnover of a community association from developer control to owner control is a uniquely vulnerable moment. Developers are increasingly presenting Florida condominium and homeowners’ associations with “standard” settlement or release agreements at turnover, often being framed as routine steps to finalize the transition of control. In reality, these agreements can have sweeping consequences, including the release of construction-defect claims before the association has conducted any meaningful independent evaluation.
The developer has years of project knowledge and access to plans, subcontractors, and internal records. The newly elected board is just beginning to organize, obtain documents, and understand the property’s condition. Many defects, especially those involving roofing, waterproofing, windows, or structural components, are latent and not yet visible. Signing a release at this stage means the association is making a binding decision under conditions of uncertainty, without full information, to release all future potential claims.
Over the last few years, there has been a rise in reports of developers offering a packaged deal: they agree to complete certain repairs, often minor punch-list or cosmetic items, and to “forgive” an alleged financial deficit (often around $50,000) supposedly owed by the association from the developer-control period. In exchange, the association is asked to sign a broad release covering all claims, including known and unknown construction defects. To a new HOA board that received their community with limited operating and reserve funds, they are left with a difficult decision to either accept the developer’s offer or assess their owners to pay this alleged debt.
These agreements are occasionally presented through community management companies, which may describe them as “standard” or "routine.” Whether due to misunderstanding or influence from the developer, management companies can unintentionally reinforce the idea that signing is expected. Any recommendation provided to HOAs about whether to sign these releases could open community management to liability down the road. The best practice for both associations and community managers is to refer any agreements to be reviewed by general counsel for the association.
The following two case studies illustrate the real-world consequences:
Case Study One: A newly transitioned board relies on its management company to negotiate with the developer-builder to resolve irrigation issues, pond concerns, and signage deficiencies, along with forgiving an asserted financial shortfall. In exchange, the board signs a broad release covering all claims, including latent defects.
Within a year, several punch-list items remain incomplete, and more serious issues arise. When the association demands completion, the developer delays, prompting the association to seek advice on how to enforce the settlement agreement. The association hires counsel to hold the developer responsible for both the previously agreed-upon items and newly identified construction defects. However, when the association brings claims against the developer, the developer points to the release of all potential construction defects in the community. Thus, the only remaining remedy is limited to enforcement of the specific punch-list terms. The community, still relatively new, has no viable claims against the developer-builder for the construction defects. With warranties expired and the release, the association must fund repairs through special assessments, despite defects that would otherwise have been actionable.
Case Study Two: A community is presented with a similar agreement as above. The management company encourages execution, suggesting it is standard and even telling the board to “name your price.” The developer also pressures the newly elected board to sign.
Instead of signing, the board consults with their attorney. Counsel advises the board not to sign the release and recommends further investigation. Engineers are retained and identify early indicators of broader issues, including stucco cracking, water intrusion, and irrigation deficiencies. Based on this information, the association declines to sign the release. Subsequent evaluation reveals potentially significant construction-defect claims, allowing the community to pursue recovery that would have been lost under the proposed agreement.
These scenarios underscore a fundamental point: signing a release at turnover is not an administrative formality—it is a major legal decision. Board members act in a fiduciary capacity on behalf of their community, and their decisions can bind all current and future owners. At turnover, an association’s right is to investigate and pursue claims. Preserving that right until a full and independent evaluation is completed is not adversarial—it is responsible governance.
Accordingly, associations should retain independent evaluations of the property and consult qualified legal counsel before signing any “standard” agreements, especially ones involving a release of future claims.
Nicholas B. Vargo is a partner in Ball Janik LLP’s Construction Practice Group. He may be reached at nvargo@balljanik.com.
Potential Gap in Workers Compensation Immunity Statutory Framework
June 02, 2026 —
David Adelstein - Florida Construction Legal UpdatesWorkers compensation insurance is important. As an owner, you want to ensure the contractors you hire have workers compensation insurance. Assuming you hire a contractor that is statutorily exempt from workers compensation, you want to make sure, no exception, that any subcontractor that is hired has workers compensation insurance. (Regardless, you always want subcontractors to have workers compensation insurance.). In construction, the prime contractor serves as the “
statutory employer” for purposes of workers compensation insurance.
With workers compensation comes
workers compensation immunity.
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David Adelstein, Kirwin NorrisMr. Adelstein may be contacted at
dma@kirwinnorris.com
US Energy Dept. Withdraws Federal ‘Zero-Emissions Building’ Definition
December 22, 2025 —
Bryan Gottlieb - Engineering News-RecordThe U.S. Dept. of Energy has
withdrawn the Biden-era federal definition of a “zero-emissions building,” marking another step in the Trump administration’s rollback of climate-focused initiatives and creating uncertainty for states, cities and owners that had informally used the guidance in project planning.
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Bryan Gottlieb, Engineering News-RecordMr. Gottlieb may be contacted at
gottliebb@enr.com
Moving in Before Substantial Completion? The Risks of Early Owner Occupancy
March 24, 2026 —
Sydney Koby - ConsensusDocsIntroduction
On many construction projects, particularly large projects facing schedule pressure, owners may begin occupying or using portions of the project before the work reaches substantial completion. This is often due to operational needs, phased turnover, or market demands that drive owners to take possession of all or part of a project while construction activities are ongoing. While early occupancy may seem practical, it can blur the lines of responsibility between owner and contractor and can create significant legal and practical complications.
These disputes are especially common on large, complex projects where punch list work, system commissioning, and closeout activities overlap with owner use. Without clear documentation and carefully drafted contract provisions, early occupancy can undermine an owner’s ability to enforce completion requirements while simultaneously exposing the contractor to claims of delay, inefficiency, or interference.
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Sydney Koby, Jones WalkerMs. Koby may be contacted at
skoby@joneswalker.com
