Most builders have insurance. Most builders think that means they’re covered. Lisa Hall and James Leach would like to have a word with you about that.
Lisa has been calling on builders across Central Texas for over 16 years — and she came into this work through her mother, who held the same role for 18 years before her. That kind of continuity tells you something about how relationship-driven this business really is.
James came in from a background in aviation law before construction pulled him in about two or three decades ago. Together they work at Maverick Risk, helping builders protect their profits, their reputation, and their balance sheet. Not just with insurance — that’s where most people stop — but with a much more complete picture of what risk actually looks like for a home builder.
The conversation starts by unpacking something that surprises a lot of builders when they first hear it: the law doesn’t see you the way you might think it does. Since homes have gone from costing $7,000 in 1955 to averaging $400,000 today, courts have quietly shifted the responsibility onto the builder’s shoulders through what’s known as implied warranty law. James puts it plainly:
“The courts have now put the monkey on the back of the builder. It’s not buyer beware — it’s seller beware for home builders. If you build it, you have an implied warranty obligation on everything you build, whether you like it or not. Not for a year — from now to the end of the statute of repose.”
That’s seven years in Texas, eight to ten in Georgia, fifteen in Iowa. It applies whether you’re building one home a year or a thousand, and it applies whether you wrote anything down or not.
The size of your operation changes what you need to worry about most. For a smaller builder, a $100,000 or $500,000 defect claim is genuinely dangerous to the business. For a large production builder, the threat looks different — it’s class action lawsuits. And those have been getting worse. James walks through a case in South Carolina where plaintiff’s lawyers went into a neighborhood, knocked on doors, and signed up 220 former homeowners against a large builder.
“They got 16.1 million for 200 homeowners. Lawyers got about half of it, rest of it goes into the pockets of the homeowner. It’s typically the lawyers that will be looking at various things and saying, if it’s not right with this home, it’s probably not right with 15 other homes. And those can get real dastardly.”
Lisa adds that production builders are especially exposed here, precisely because of their visibility:
“They’ll go into neighborhoods and start door knocking. Usually it’s a particular builder’s name, one after another — that’s what they’re looking for. They’re looking for where the bigger money is.”
The good news — and this is the part of the conversation worth paying close attention to — is that there’s a legal tool that can take all of that off the table. The Federal Arbitration Act has been around since 1925, and it’s been tested at the U.S. Supreme Court more than a dozen times. As of a unanimous 2019 decision, if a builder has the right language in their contracts, those homeowners cannot join a class. James noted Lennar used this exact argument on appeal in Florida against a class action brought by about 300 homeowners. The class was dismissed. That’s the difference good contracts make.
Which leads to what Lisa and James call the “contract firewall” — four contracts that need to be aligned with each other: the purchase and sales contract, the warranty contract, the subcontractor agreement, and the insurance contract.
“If those contracts line up, you’ve done a really good job of building what we call a contract firewall to protect your business and keep the really nasty things from happening to you.”
Insurance on its own doesn’t prevent litigation. It doesn’t stop a class action. And as James points out, once you’re in a courtroom, you’re in uncertain territory:
“When you get into litigation, it’s never-never land. You don’t know what’s going to happen, don’t know how long it’s going to last, have no idea what a jury is going to do with it — except it’s probably going to be bad.”
To illustrate just how bad, he tracks the same scenario 30 years apart: the McDonald’s hot coffee case cost $3 million. The equivalent Starbucks case last year cost $50 million. A distracted truck driver in Florida recently came back with a jury award of $1 billion.
The subcontractor piece is one that catches a lot of builders off guard. Fake certificates of insurance exist. Policies with residential construction quietly excluded exist.
“There are too many fake certificates of insurance are out there — they’ll white out a date, white out a coverage limit, make it up. It also happens that you get a real certificate, but that certificate doesn’t give you the exclusions that are applicable. There are insurance companies that will insure a subcontractor but exclude residential construction. So they’ve got an insurance policy, you get a certificate — but they’ve really got limited coverage.”
James and Lisa’s team helps builders with subcontractor compliance tools because that exposure, quietly sitting across 20 or 100 different subs, adds up fast.
For larger builders, there’s also a conversation to be had about captive insurance — essentially owning your own insurance company to absorb some of the risk rather than paying commercial premiums on everything. Lisa mentions that once builders reach a certain revenue range, it starts making sense to look at it seriously. James is quick to add it has to be done correctly, with proper books, records, and arm’s length structure — otherwise the IRS will treat it as fancy self-insurance and the tax benefits disappear.
On the rapid-fire question about the most common risk mistake builders make, Lisa didn’t hesitate:
“Bad contracts.”
And the biggest industry myth about insurance?
“That we cover everything.”
The episode finishes with both of them looking ahead. James sees four to six million homes of pent-up demand nationally, waiting for interest rates to ease enough for buyers to come back out. Lisa, who sits on the board of the Texas Association of Builders, is focused on getting production builders engaged at the legislative level — impact fees, unnecessary codes, and infrastructure challenges are all shaping what affordable housing can even look like going forward.
The through line across this whole conversation is that the builders who get into serious trouble are usually the ones who found out too late that their contracts weren’t as solid as they thought. James has a phrase for it:
“It’s like pre-flighting an airplane. You’ve got to do it up front. If you get to 10,000 feet, it’s too late. Same with a builder — if it’s five years down the road and the home has a million-dollar claim and you haven’t protected yourself up front, you’re out of luck.”
Get in front of it early. Review your contracts, align them, and don’t wait for a crisis to find out what’s missing.
Find Maverick Risk at:
- Website: www.maverick-risk.com
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- LinkedIn: linkedin.com/company/maverickrisk
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About the Guests
James Leach is Executive Director at Maverick Risk, owned by Bankers Financial, a diversified insurance group operating nationwide. An attorney admitted to the Bar in Iowa since 1990, James holds a JD with Honors from Drake University School of Law, an MBA and Master of Insurance from Georgia State University, and a BA from Duke University.
He is also an Airline Transport Pilot and Certified Flight Instructor with over 6,000 pilot hours, and a veteran of the U.S. Air Force where he flew the F-4E Phantom Jet. His career includes serving as President of National Aviation Underwriters and National General Insurance Company, Executive Vice President at Bermuda-based American Safety Insurance Group, CEO of FHB Insurance, and Senior Vice President and General Counsel at Builders Insurance Group.
Lisa Hall is a seasoned expert in the building industry with over 25 years of experience in housing. For the past seven years she has been a key part of Maverick’s success in the central Texas market. Lisa serves on the board of directors of the Texas Association of Builders and is highly active within her local builder associations.
She is focused on helping builders build stronger risk management strategies using Maverick’s products and services — and if you’re in Texas, there’s a very good chance she already knows someone you know.
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