A Building You Finished Four Years Ago Just Burned. Here Is What the Next Two Weeks Look Like

Author: Grit Insurance Group

You finished the job. Punch list closed, retention released, certificate of occupancy issued. The crew moved on to eleven other projects. You have not thought about that building in years.

Then a certified letter shows up.

It tells you there was a fire. It tells you the property insurance carrier paid its insured and is now investigating who is responsible. It tells you that you are invited to a joint examination of the fire scene, on a specific date, and that the examination will be destructive. It tells you to preserve every document and every text message related to the project. And it tells you, in plain language, to notify your own insurance company immediately.

Most contractors have never seen this letter and have no plan for it. The first two weeks after it arrives do more to determine the outcome than anything that happens in the following two years.

Here is how the process actually works, and what to do.

First, what subrogation means when you are the one receiving the letter

Most contractors encounter the word subrogation in a contract clause and never think about it again. It is simpler than it sounds.

When a property owner suffers a large loss, their own property carrier pays the claim. Having paid, that carrier steps into the owner's shoes and acquires the owner's right to recover from whoever caused the loss. That is subrogation. The carrier is not suing on its own behalf so much as standing where its insured stood.

Two consequences follow, and they matter:

• The party pursuing you is not the building owner. It is a large institution with a claims budget, forensic engineers on retainer, and outside counsel who do this specific work full time. The relationship you had with the owner is not the relationship you are now in.
• The amount at stake is the amount the carrier paid, not the value of your contract. A subcontractor whose original scope was worth $180,000 can be looking at a claim in the millions. Your exposure is not proportional to what you were paid.

This is also why a waiver of subrogation in a construction contract is worth real money. When the owner's property policy includes a waiver of subrogation in favor of the contractors, the carrier gives up the right to come after the parties named. Whether one exists, and who it covers, is one of the first things to find out. It is decided at contract signing, years before anyone needs it.

A large loss does not put one contractor on notice. It puts the whole build team on notice.

Here is the part that surprises people most.

When a fire loss is large and the cause is not yet established, the investigating carrier does not pick a defendant. It notices everyone with a plausible connection to the area of origin. In a multifamily building that can mean the developer, the general contractor, the architect, the structural and mechanical engineers, the inspection firm, and then the entire relevant trade stack: electrical, HVAC and mechanical, plumbing, framing, drywall, insulation, roofing, exterior finishes, fire sprinkler, elevator. It also commonly reaches the manufacturers of specific installed equipment, identified down to model and serial number.

Twenty or more parties on a single notice is normal. That has three practical implications:

1. Receiving the letter is not an accusation. Notice letters routinely state that the investigation is ongoing and no liability determinations have been made. That is usually true. You may be on the list simply because your trade operated in the same part of the building.
2. You will not be the one setting the schedule. With that many parties, requests to move the examination date are frequently refused outright. Treat the date on the letter as fixed.
3. Doing nothing is the worst available option. Many parties on these lists never respond. The investigation proceeds without them.

The joint scene examination is a one-time event

The letter will invite you to a joint examination of the fire scene, typically conducted under NFPA 921, the standard guide for fire and explosion investigations. Two words in that invitation deserve your full attention: destructive and only.

A destructive examination means material is cut, removed, and disassembled to reach the area of origin. Evidence may be taken off site for laboratory analysis. Once the examination is finished, repairs begin and the scene ceases to exist.

If you do not attend, and do not send someone qualified to look on your behalf, you will never see the physical evidence in its original condition. You will be left arguing about someone else's photographs and someone else's conclusions, years later, with no independent record of your own.

Sending your own expert costs money. Not sending one can cost the case. This is a decision to make with your carrier and your attorney, quickly, because these letters typically carry a response deadline a couple of weeks ahead of the examination itself.

The litigation hold is not paperwork. It is the case.

The letter will almost certainly include a preservation demand, often called a litigation hold. It states that litigation is reasonably anticipated and that you are obligated to preserve everything potentially relevant.

Contractors tend to read this as legal boilerplate. It is the opposite. Because the fire happened years after you finished, the ordinary operation of your own systems is actively destroying your defense right now.

Things that quietly delete evidence while you decide what to do:

• Email retention and auto-delete rules
• Text and chat message expiration on phones and messaging apps
• Backup rotation that overwrites older snapshots
• Project management platform migrations and account cancellations
• Phone and laptop resets, and routine device replacement
• Offboarding processes that wipe former employees' mailboxes and drives
• Scheduled destruction of paper closeout files

Two points that catch people:

Former employees matter most. The superintendent who ran that job in 2022 probably left in 2023. His email, his phone, his notes, and his photos may be the most important evidence in the case, and standard offboarding is designed to delete exactly that.

Do not tidy up the files. Preservation demands typically extend to metadata, version history, and audit logs. Bulk copying, renaming, or re-saving project files can alter timestamps. Opening a folder to "get organized" before your attorney sets up preservation can create a real problem out of nothing. Freeze it, then get instructions.

The right sequence is short: suspend the deletion, do not touch the files, and confirm in writing that you have done so.

The policy that answers is the one from the year you did the work

This is where a lot of contractors get an unpleasant surprise, and it is worth being precise about.

A standard commercial general liability policy responds based on when the damage occurs, not when the work was performed. The fire is the occurrence. So the policy that responds is generally the one in force on the date of the fire, and that only helps you if the products-completed operations coverage has been continuously in place across the whole span since you finished.

Where the gaps come from:

• Coverage lapsed for a season or between carriers
• Products-completed operations was written at a lower aggregate than the per-occurrence limit
• A carrier change came with terms that treat prior work differently
• A division was closed or an entity was wound down and its policy was allowed to expire

We have written about how that coverage works in detail in Your Wiring Job From Last Year Can Still Burn You, which is written for electrical contractors but applies to any trade whose work can fail years later.

One more item, specifically for general contractors: additional insured status from your subs usually does not survive completion. The common endorsement covering ongoing operations stops when the work is done. Protection for the completed operations tail generally requires a separate endorsement, commonly CG 20 37. A GC holding a four-year-old certificate that says "additional insured" may have nothing at all from that sub on a completed operations claim. Check the endorsement, not the certificate summary.

How long does the tail actually run?

Longer than most contractors assume, and it varies by state.

Utah is a useful example because the statute is clear. Under Utah Code § 78B-2-225, actions related to improvements to real property break down like this:

• Contract and warranty actions: 6 years from completion, unless an express contract or warranty sets a different period
• Other actions: 2 years from discovery
• Absolute repose: no action more than 9 years after completion or abandonment
• If the cause of action is discovered in the eighth or ninth year, the claimant gets 2 additional years

"Completion" is defined as the earliest of a certificate of substantial completion, a certificate of occupancy, or the date of first use or possession. And the repose protection does not apply where there was fraudulent concealment or a willful or intentional act.

So a fire four years after substantial completion sits comfortably inside the window, with years to spare. Across the country the range generally runs from roughly 6 to 10 years, with some states longer. Your retention policy should be built around your state's actual number, not around a three-year habit.

The consequence nobody mentions: your bonding

If you carry a surety program, a large open claim is not only an insurance matter. It is a credit matter.

Sureties underwrite your balance sheet, your work in progress, and your character. A significant open claim against your company shows up in the financial statements and in the conversation with the underwriter. Depending on size and how it is handled, it can affect your single job limit, your aggregate capacity, and your rate. The contractors who navigate this well are the ones whose broker gets in front of the surety early with a clear explanation, rather than letting the underwriter discover it during a renewal.

That coordination between the casualty side and the surety side is the whole argument for having both in one place. If you want the background on how a program is built, start with bonding program vs one-off bonds.

The first 72 hours: a checklist

1. Tender the letter to your broker the same day. Not next week. Late notice of a claim can jeopardize coverage, and these letters frequently say so directly.
2. Do not answer substantive questions on your own. Not by phone, not by email, not helpfully. Route communication through your carrier and counsel.
3. Suspend deletion immediately across email, messaging, backups, devices, and project platforms. Then stop touching the files.
4. Confirm the hold in writing to the party who sent the letter, once your attorney tells you what to say.
5. Identify the correct policy year and pull the declarations pages for every year from the start of the work forward.
6. Locate the project file: subcontract, certificates of insurance from your own subs, daily logs, submittals, RFIs, change orders, inspection sign-offs, closeout documents, and photographs.
7. Find out whether a waiver of subrogation applies to you under the owner's property policy.
8. Decide on representation at the scene examination before the response deadline, not after.
9. Tell your surety broker if you have a bond program.

What to do before any of this ever happens

• Require the completed operations additional insured endorsement from every sub, by endorsement number, and verify you received it.
• Keep certificates of insurance and subcontracts for the full statute of repose in your state. Not three years. The full period.
• Keep closeout files, daily logs, and job photographs on the same schedule.
• Never let general liability lapse, including through slow seasons and carrier changes, and ask specifically about the products-completed operations aggregate rather than assuming it matches your per-occurrence limit.
• Get indemnity, waiver of subrogation, and additional insured language reviewed before signing, while the terms are still open. After a loss there is nothing left to negotiate.

Frequently Asked Questions

What does it mean when an insurance company subrogates against my company?

The property owner's insurer paid its insured for the loss and has taken over the owner's right to recover from whoever was responsible. It is pursuing you for what it paid out. The amount claimed is tied to the size of the loss, not the size of your original contract.

Am I being sued if I get a notice and litigation hold letter?

Not necessarily. These letters commonly go to every party connected to the area of origin, and they typically state that the investigation is ongoing and no determination of liability has been made. It is notice of potential exposure. It still requires an immediate response.

Do I have to attend the joint scene examination?

You are not compelled to, but the examination is usually destructive and is typically the only opportunity to inspect the evidence before repairs begin. If you skip it, you generally give up any independent look at the physical evidence permanently. Make that decision with your carrier and counsel.

Which of my insurance policies responds to a fire years after I finished the work?

Generally the policy in force when the damage occurs, with the products-completed operations coverage doing the work. That means continuity across the years since completion matters, and gaps from lapses or carrier changes can leave you exposed. Have your broker confirm which policy year answers.

How long after finishing a project can a contractor be held responsible?

It depends on the state. In Utah, contract and warranty actions run 6 years from completion and there is a 9-year absolute repose, extended by 2 years if the claim is discovered in the eighth or ninth year. Nationally the range generally runs about 6 to 10 years, with some states longer. Build your record retention around your state's actual period.

Can a subrogation claim affect my bonding capacity?

It can. Sureties look at open claims as part of underwriting your financial strength. A large open claim can affect your single and aggregate limits and your rate. Getting ahead of it with your surety, rather than having it discovered at renewal, generally produces a better outcome.

Talk to the Grit Team

If a preservation letter or a claim notice is sitting on your desk right now, call us today. Not next week. We will help you tender it correctly, identify the policy year that responds, and coordinate the casualty and surety sides so nothing gets discovered at renewal.

If nothing has happened yet, that is the better call to make. We will review your completed operations coverage, your subcontractor endorsement requirements, and your retention practices while there is still time for it to matter.

Call us directly: (801) 505-5500

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We came from the trades we insure. No corporate speak. Straight answers from people who know the business.

This article is general education, not legal advice or a coverage opinion. Statutes of limitation and repose vary by state and change over time. Coverage depends on the specific terms, limits, and exclusions of your policy. If you have received a claim notice or preservation demand, consult your attorney and your broker.