With years of experience working with developers, designers, contractors and subcontractors on insurance and bonds on various size and types of projects, Offenhauser understands the developer’s, designer’s, contractor’s and subcontractor’s respective risks. Every project has unique risk characteristics which must be accurately accessed and divided between the project participants. Whether the project is $500,000 or $250,000,000, Offenhauser is your source for insurance coverage design, advocacy, risk management counsel and implementation.

For the developer, we know what contractor insurance and bonds cost, frequently recommend changes to the indemnity and insurance specs on contracts, understand construction defect and delay in construction exposures, have our own claims department and resource partners in the industry for administration of complex strategies such as Owner Controlled Insurance Programs or WRAPs.

These two exposures are two of the largest, but most misunderstood exposures to a project. For the developer, control of the liability and builders risk programs is a huge plus so the insurance with respond as anticipated, even it the claim occurs years later.

Construction defects

Water intrusion, soil issues, design failure and improper installation are examples of construction defect claims that can cost MMs. And the exposure increases with condominiums!   In most states it’s five years after construction is completed before the owner, contractor and designers are protected by statute of repose laws, but in Texas it is ten. Offenhauser’s response is to design insurance to the statute of the repose and an administrative team diligently document and photo of the project and check subcontractor’s insurance as well as assistance with risk transfer language as part of the insurance and indemnity sections of the contract.

Delay in Completion

If a fire occurred on a project that was 90% complete, could the developer afford the additional costs and time it would take to rebuild? This is one of the most overlooked, but largest exposures to a project. It may take many forms or a combination of:

1. soft costs (interest on money borrowed, taxes, rentals, advertising, renegotiation of leases, designer fees, project administration, legal, accounting etc.),
2. loss of rents and
3. loss or earnings

Through negotiation or control of the liability and builders risk insurance programs, Offenhauser is skilled in transferring and mitigating the risks of our clients.

1. MONEY – Owner realizes the savings. Contractors GL/Excess Insurance costs average .75% to 1.25% of their construction costs. Under a Wrap Up program these costs would be excluded from their bids.
2. CONTROL – If the Contractor and the Owner part ways in the middle of the project here are major complexities involved in converting a CCIP to another type of program whether it be another CCIP or traditional insurance.
3. “FIRST NAMED INSURED” STATUS VERSUS “ADDITIONAL INSURED” STATUS – Most CCIP’s include the Owner as only additional insured. Coverage for the Owner is generally restricted to the actions of the General Contractor and subs and not the Owner’s sold negligence. As a first named insured you have the rights (and obligations) for premium payments, claims (this can be significant when there is a large claim as the Owner would have direct contact with the insurance company on these issues.
4. ABILITY TO ALLOW FOR CERTAIN CONTRACTORS – The Owner would lose control on what contractors they choose to include or exclude in a CCIP. This could be important on Minority or disadvantaged contractors when the owner and general contractor disagree.
5. SAFETY ON THE JOBSITE – Although most General Contractors provide safety supervision on-site, the Owner would have more input on certain issues if they were controlling the insurance portion. The carrier will always look to the buyer of the program for assistance and support.
6. PUBLIC RELATIONS – Regardless, the Owner will always be looked to when something bad (or good) happens regarding the project whether they had control or not. Having controls allow them the flexibility to take charge in any situation.

Subdivision bonds

Guarantees to the public body that the required improvements will be completed as per contract or engineer’s estimate and is often required to obtain a construction permit on large multi year projects.    This may be for a commercial or residential development.

Downpayment Bonds

Are utilized for the benefit of developer by used the cash deposit of the purchaser of real estate to finance construction.   Concurrently, it guarantees the purchaser a return of deposit in the event the title does not close.   This may be used for the purchase of residential or commercial property