Only a few markets are entertaining these policies, and one of them has been having short windows of availability only. We have outlined the program offered by the market that is most active, which, incidentally, is currently the least expensive as well.

All the available markets offer a 3 + 10 approach in California. Each has similar requirements.

Defense is inside the deductibles and inside the limits of liability offered. Deductibles are $50,000 each occurrence or $250,000 each occurrence.

For large projects, many feel the larger deductible makes sense.

Available limits of liability: to $10,000,000 per occurrence/aggregate. Most programs are on an occurrence basis with a ten year prepaid discovery period on completed operations, making the policy equivalent to claims made for the ERP. Other policies are simply claims made arrangements with the three year build out period plus the ten year extended reporting period prepaid. This satisfies the bankers as it corresponds with the statute of limitations for the work performed.

Requirements for Binding (or for application) include:

Submission of the wrap up application

All 15 of the available insurers work from the application we have posted, but some may require their own application form to be completed before they will bind coverage.

1. Submit a letter from the developer or general contractor on his letterhead outlining the following points in order:

• Estimated Construction costs for the project term.
• Estimated Payroll for project term.
• Estimated total sales price of the units.
• A statement that you will purchase monitoring services from Quality Built or a similar firm and will comply with their recommendations. This is requirement of all the underwriters. The pricing for this service is approximately $525 per unit. For up-to-date information, go to www.qualitybuilt.com or to www.gafcon.com.
• A statement that a wrap administration firm that meets the approval of the underwriters will be contracted with to do the wrap-up administration.
• Include a copy of the general contractor’s resume.

2. Submit the Application – Complete it to show —

• The Named Insured (owner, general contractor and their subcontractors. Include mailing address, location of Wrap Up project and Length of Construction Period. Do not play it too close to the vest. Projects seldom get finished on the date planned. There is simply too much red tape to wade through, too many things that can delay a project. If you think it is supposed to be done in 24 months, ask for 36 months for the build out. You will probably need most of it. If you are looking at a 36 month build out, it is best to try for a 48 month window.
• Attach the balance sheet or construction budget for the project.
• Name, address, phone number and experience of the construction manager.
• Complete the Description of the project to include number of buildings, number of units, number of stories, construction type and surrounding exposures to project site. Include a plot plan. It is very helpful.

Please include any other information you want to add for consideration, such as resumes of principals, resume of contractor – the kind of stuff that adds credibility to the team — lists of projects completed, showing when and the values. An outline of the safety plan helps. Include a balance sheet and income statement showing sources of funding, paid in capital, etc.

All the markets will ask for a copy of your home warranty program or at the minimum, an outline of it. This is a very important part of your insurance planning under the provisions of California’s Senate Bill 800. It protects you from losing the benefits of the OCIP you paid for. Please call our office for references to the plans available in this area. Upon request, we will also give you a list of wrap up administrators and of available quality control services.