Over the past several years many builders/developers have declared bankruptcy or have otherwise gone out of business. Fortunately for homeowners, even if a builder is bankrupt or out of business, its insurance carriers remain obligated to defend the developer against construction defect claims and causes of action, and to indemnify the builder for any such covered losses. Thus, it is critical in all instances to determine at the outset and before substantial litigation costs are incurred, the exact insurance posture of the builder. This will enable homeowners to balance litigation costs against the pool of potential recoverable monies and thereby make an informed decision regarding the economic propriety of pursuing litigation.