Oregon Construction Contractors (CCB) Practice Test

What did the surge in construction defect claims and lawsuits in the early 2000s lead to for contractors?

1. Decreased demand for construction projects

2. Reduced costs for obtaining liability insurance

3. Difficulty and expense in obtaining liability insurance

4. Increased government support

The correct answer is: Difficulty and expense in obtaining liability insurance

The surge in construction defect claims and lawsuits in the early 2000s led to significant challenges for contractors in terms of obtaining liability insurance. As the number of claims increased, insurance companies faced greater financial risk, which often resulted in stricter underwriting standards and higher premiums for liability coverage. This increase in risk made it more challenging for contractors to secure the necessary insurance to protect themselves against potential claims. Consequently, many contractors found themselves facing both difficulty in finding insurers willing to provide coverage as well as increased costs associated with those policies. This situation created a ripple effect in the construction industry, where the rising costs of liability insurance could lead to decreased competitiveness among contractors, as smaller or less financially stable companies struggled to keep up with the expenses. Understanding these dynamics is crucial, as they highlight the importance of risk management and insurance considerations in the construction contracting field.