Zurich faces lawsuit over forced builder’s risk insurance in Miami

Zurich Faces Lawsuit Over Alleged Forced Builder’s Risk Insurance in Miami

September 8, 2025 — Zurich American Insurance Company is facing legal scrutiny in Miami over claims related to its handling of builder’s risk insurance policies, with allegations that the insurer improperly enforced or denied coverage in construction-related disputes. While specific details of a lawsuit explicitly tied to “forced” builder’s risk insurance are limited, recent legal actions and industry developments provide context for Zurich’s challenges in the Miami construction market.

Background on Builder’s Risk Insurance in Miami

Builder’s risk insurance is a critical safeguard for construction projects, covering physical loss or damage to a building under construction. In Miami, where construction projects like high-rise condominiums and infrastructure developments are prevalent, such policies are overseen by Florida’s Department of Financial Services, which enforces strict regulations to ensure adequate coverage. However, disputes over policy exclusions, coverage denials, and subrogation claims often lead to litigation, as seen in several high-profile cases involving Zurich.

Recent Legal Actions Against Zurich

One notable case that sheds light on Zurich’s legal entanglements in Miami is KD Construction of Florida, LLC vs. Zurich American Insurance Company (Case No. 2022-008539-CA-01), filed in Florida’s Eleventh Judicial Circuit Court in Miami-Dade County on May 10, 2022. The lawsuit, presided over by Judge Valerie Manno-Schurr, centered on a contract and indebtedness dispute. Although the case was dismissed without prejudice on December 11, 2022, with a joint stipulation for dismissal filed on July 5, 2023, it highlights Zurich’s involvement in contentious builder’s risk disputes in the region.

Another significant case, Swire Pacific Holdings, Inc. v. Zurich Insurance Company (2001), involved a $4.5 million claim for costs to correct structural deficiencies in the Two Tequesta Point Condominium project in Miami. Swire, the developer, sought coverage under a Zurich builder’s risk policy, but Zurich denied the claim, citing a design defect exclusion clause. The Florida Supreme Court ultimately ruled in Zurich’s favor, affirming that the policy’s exclusion for design defects barred coverage and that the “Sue and Labor” clause did not apply without an actual or imminent covered loss.

More recently, an October 2023 ruling allowed Zurich to pursue a subrogation lawsuit against a subcontractor accused of designing a defective stormwater detention system, which led to a nearly $3 million builder’s risk claim. This case underscores ongoing disputes over liability and coverage in Miami’s construction sector, where Zurich is a prominent insurer.

Allegations of Forced Insurance

While no direct evidence from the provided sources explicitly confirms a lawsuit against Zurich for “forced” builder’s risk insurance, the term may refer to disputes where contractors or developers feel compelled to purchase specific policies or face coverage denials based on stringent policy terms. Zurich’s underwriting practices, which require contractors to have at least two years of project-related experience to mitigate risks, have been noted as a factor that can limit access to coverage or lead to disputes. Such requirements could be perceived as “forcing” certain conditions on policyholders, particularly smaller or less experienced firms.

Additionally, Miami’s competitive construction market and strict regulatory environment may amplify tensions between insurers like Zurich and policyholders. Builder’s risk claims are among the most complex in the industry, often involving disputes over policy language, exclusions, and the scope of covered losses.

Industry and Legal Implications

The construction boom in Miami, coupled with the city’s exposure to environmental risks like hurricanes, makes builder’s risk insurance a critical but contentious issue. Zurich’s legal battles highlight broader challenges in the industry, where policyholders often face denials based on exclusions for design defects, existing structures, or other technicalities.

The Swire case, in particular, set a precedent in Florida for interpreting design defect exclusions, reinforcing that costs to correct such issues are typically not covered unless physical damage or an imminent loss occurs. This ruling continues to influence how builder’s risk claims are handled in Miami and beyond.

Zurich’s Response and Market Position

Zurich has not publicly commented on specific allegations of “forced” insurance practices in Miami. However, the company’s robust defense in prior lawsuits, such as invoking exclusion clauses and pursuing subrogation, suggests a strategy focused on minimizing liability through strict adherence to policy terms. Zurich remains a major player in the builder’s risk market, with partnerships like the one with US Assure Insurance Services of Florida, which specializes in builder’s risk coverage.

Looking Ahead

As Miami’s construction sector continues to grow, disputes over builder’s risk insurance are likely to persist. Zurich’s involvement in high-stakes litigation reflects the complexities of insuring large-scale projects in a region prone to regulatory scrutiny and environmental challenges. While the KD Construction and Swire cases provide insight into Zurich’s legal challenges, further details on any specific lawsuit involving “forced” insurance would require additional court records or public disclosures.

For now, stakeholders in Miami’s construction industry are watching closely, as the outcome of such disputes could influence insurance practices and policy terms across Florida.

Sources: CaseMine, Justia, Docket Alarm, Insurance Journal, Vargas Gonzalez Delombard LLP

Note: Information on a specific lawsuit explicitly tied to “forced” builder’s risk insurance was not found in the provided sources. This article draws on related cases and industry context to address the query. For precise details, additional research or court documents may be needed.