The Role of Insurance in Construction Mediation: What You Need to Know Before You Walk In
Wed, May 13th, 2026 | by Miles Mediation and Arbitration | Article | Social Share
If you are involved in a construction dispute, there is a good chance insurance will play a
role in the outcome. In many cases, it is not just a factor; it is the factor driving whether a case
settles and for how much. What often causes problems is that not everyone fully understands how
insurance is shaping the negotiation until they are already sitting at the mediation table. By then,
it can be hard to recover. Whether the case involves defective work, water intrusion, delay claims,
or injury claims, someone is almost always looking to an insurance policy to help fund a resolution.
That brings additional people into the mix, including adjusters and sometimes coverage counsel,
along with internal processes that do not always move at the same pace as litigation. As a result, a
few recurring issues tend to come up.
One of the most common issues is a misunderstanding about what is actually covered. Not
every part of a construction claim falls within the scope of an insurance policy. For example, there
may be coverage for damage caused by defective work, but not for the cost to fix the defective
work itself. Certain categories of damages, such as mold, fraud, delay, or design-related issues,
may be limited or excluded altogether. A situation that arises more often than it should: a party
comes to mediation with significant damages, expecting that insurance will meaningfully
contribute to a resolution, only to learn (sometimes for the first time) that a very small portion of
those damages (for example, 5-10%) is actually covered. That is frustrating for the plaintiff, and it
often surprises the defendant as well. Many contractors assume their policy will cover the claim
and are not prepared to contribute significant funds out of pocket to close the gap.
Authority is another issue, and it is not always as straightforward as it sounds. You may
have an insurance adjuster at mediation with settlement authority, but not enough authority to settle
the case. That frequently comes down to timing and preparation. If the insurer did not receive key
information in advance, like expert reports or damages documentation, he or she may not have had
a full opportunity to evaluate the claim. As a result, the authority brought to mediation may fall
short of what is needed to reach a deal, and momentum can stall.
There is also the question of alignment between the insured and the insurer. While they are
usually working toward the same general goal, their interests are not always identical. In some
cases a party may not want to pay (based on principle, reputation, or for business reasons) while
the insurance company is focused on resolving the case within policy limits. Many policies give
the insurance company the right to settle a claim without the insured’s consent. When that dynamic
is in play, it can create tension that affects the negotiation if it is not addressed in advance.
Lastly, timing matters. If mediation takes place before the coverage issues are understood,
or before the carrier has had sufficient time to evaluate the claim, it can be premature. On the other
hand, waiting too long can mean the parties are more entrenched after incurring significant
litigation expenses. Where insurance is involved, it is worth making sure that the important
information has been exchanged and that the insurance adjuster is in a position to meaningfully
participate in the mediation.
The mediations that tend to be most successful are the ones where there are no surprises –
where everyone understands the coverage, the limits, and who has the ability to make decisions.
In construction disputes insurance is often the piece that determines whether a case resolves.
Taking the time to understand how it fits into the picture before you walk into mediation can make
all the difference.
*Originally published in the Jacksonville Daily Record and reprinted with permission.
About Jennifer Grippa
Jennifer has 22 years of courtroom, trial, and conflict resolution experience. She is a former partner and construction practice group leader of a large 150+ member law firm and is double- barred in both Florida and Georgia. As a Florida Supreme Court Certified Circuit Court Mediator, Registered Neutral in the State of Georgia, and a Super Lawyer in the area of ADR, she resolves complex litigation.