Why do Construction Defect Claims Almost Never Settle During the CDARA Notice of Claim Process?

Construction defect disputes in Colorado are designed to settle early under CDARA. In practice, the notice of claim stage rarely produces resolution. It usually hardens positions instead.

TIME VALUE OF MONEY AND STRATEGIC DELAY
Early settlement is financially inefficient. Contractors and insurers lack full scope, causation, and allocation clarity. Paying too soon risks overpayment, so parties wait for expert development.

INSURANCE CARRIER INCENTIVES
Carriers are reluctant to fund meaningful settlements without engineering input and coverage clarity. Early indemnity payments are often viewed as precedent-setting, which pushes resolution downstream.

HOMEOWNER EMOTIONS AND EXPECTATIONS
Homeowners often begin with high emotional stakes tied to visible damage. When technical CDARA responses arrive, expectations and defense positions tend to diverge further rather than converge.

STATUTORY PROCESS DRIVES EARLY ADVERSARIAL FRAMING
CDARA requires formal notices, inspections, and position statements. That structure forces parties into litigation posture early, not compromise.

INCOMPLETE INFORMATION AND COMPETING EXPERTS
Causation is rarely clear at the outset. Multiple trades, design issues, and site conditions create competing theories that are difficult to price early.

ALLOCATION AMONG MULTIPLE PARTIES
Even clear defects often involve shared responsibility. No party wants to overpay before contribution rights are sorted.

BOTTOM LINE
CDARA functions less as a settlement valve and more as a structured information-gathering phase. By the time facts are clear enough to settle, the dispute has usually moved closer to litigation.