Limits of Liability:

Two popular configurations of liability limits are available. The first is a rather basic policy that will satisfy the lenders and the city, but probably does not satisfy your attorney, your broker, nor your risk manager as having adequate limits for the duration of the project.

LIMITS
$1,000,000 Per Occurrence
$2,000,000 General Aggregate, applies per policy
$1,000,000 Products/completed operations aggregate applies per policy.
$1,000,000 Advertising injury/ personal injury
The following configuration is more popular with the insurance professionals and the legal professionals.  Moreover, it gives the required base on which excess limits can be stacked to provide the project with limits up to $50 million if needed:

Recommended Limits:
$2,000,000 Per Occurrence
$2,000,000 General Aggregate, applies per policy
$2,000,000 Products/completed operations aggregate applies per policy.
$2,000,000 Advertising injury/ personal injury
With this $2,000,000 floor, we can build another $10 million over that, and then arrange another $10 million over the ten million excess of the $2 million, and so on.  The point to remember is no one will build over the $1 million limits configuration.

Aggregate Limit: one limit for the entire policy term

Defense: included within policy limit. This is often the reason excess limits are purchased.

Deductible Or Self Insured Retention:

$50,000 each occurrence, including loss adjustment expense. Defense costs included within the deductible or S.I.R. (self insured retention);  and they are within the limit of liability. For very large projects, we often used a plan with larger retentions of $100,000 — $150,000 – or $250,000. However, in today’s soft market $25,000 or $50,000 has become quite afordable.

Claims Handling: By Insurance Company or an agreed T.P.A.

Safety & OCIP Administration By:

An approved administration firm. Several such firms have emerged in the past five years. We will make recommendations to you for your particular project. Some of the insurers are still requiring their favorites be used.

Peer Review Requirements:

Several Peer Review firms have emerged during the last half decade, and some are more user friendly than are others. Some grew too fast, causing problems for everyone.

Minimum Premium: $50,000 for limits of $1 million per occurrence/$2,000,000 aggregate/ $1,000,000 completed operations for small projects; larger premiums for those above 6-8 units.

Taxes: 3.25% in California

Brokerage and policy fees:

Brokers charge 5% surplus lines broker fee on several products; others vary according to whether or not the policy is purchased with or without commission included. The retail brokerage fee or commission is normally 10% and may be strictly a service fee, or a combination of commission and fee, depending on the company we are dealing with.

Inspection fee:
An inspection fee is charged by the Administration company for writing a report for the insurer covering your experience, risk manage procedures, and risk containment procedures. Often, the safety engineer writing this report will provide a list of those things that you should be concerned about to maintain a claims free project. All policies contain a clause that requires the purchaser to comply with the safety engineer’s recommendations.

Audit Minimum: 100 % of term premium. Premium can only be adjusted upward by audit.

Maximum Policy Limits:
$5,000,000 per occurrence/aggregate
$5,000,000 aggregate completed operations
Excess limits can be arranged over the $2,000,000 or the $5,000,000 figure to whatever level is required.

Maximum Term:
3 years is the normal term; however, we have had terms of 4 years granted when there was a large number of units involved. Completed operations is governed by state statues for extended products-completed operations. In California this means the completed operations coverage runs for 120 months from certificate of occupancy, final inspection, or substantial completion. Abandonned projects will have the completed operations start one year after construction stops.

Maximum Project Size:
There is no maximum size for a project to enjoy the benefits of a wrap up program.

Down Payment:
Minimum upon binding. 35 % of premium plus taxes and fees. Normally, to facilitate expediting your order, we ask these funds be wired to our bank account so we can immediately send them to the company to cause them to bind the order.

Standard Exclusions:
Standard policy exclusions are in the ISO policy form. Additional exclusions are then attached, including:
Intellectual property
Cross liability suits
Earth movement or subsidence (we have been getting this removed)
Property damage to the Project (This is covered by the Project builder’s risk policy.)
Premises Medical payments
Fire damage legal liability
Engineers, Architects or Surveyors Professional Liability. Many companies include the design professionals for bodily injury and property damage, but not for economic loss due to professional errors in design.
Construction Managers Errors and Omissions (This is available as a separate policy.

Exterior Insulation and Finish Systems
Exclusion for California Civil Code Section 895-945.5 Proceedings.
For a complete discussion of these forms, please call us at 818 407 3838 and ask for Claude Stephenson or Mike Chan.   If we do not have the information you are seeking, we have contacts who can provide it to us within 24 hours.