Commercial building owner with renovation

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Shagster12
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Re: Commercial building owner with renovation

Post by Shagster12 »

"If the contractor is a sole prop without workers compensation or if he does have employees and is excluded from his own policy, couldn't he potentially sue for injury as a result of something on the premises not related to his own construction activities?"

Add this thought... If he's excluded from his own comp policy chances are about 99% he won't be out on the job site....
Rob
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Re: Commercial building owner with renovation

Post by Rob »

Shagster12 wrote:Ok Rob here's my two cents:
Cut through all the 'what ifs' and advise him this;
DON'T do the work yourself, hire a fully licensed and insured GC to do the TI and assume the liability for the project, that's why Contractors contract! Then get AIs for the Liability and Work comp policies.
Worry about the insurability of the new operation once the new operation is built.
End of story....
Then when the GC gets injured because he tripped over a hazard already on the property which policy would respond?
Rob
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Re: Commercial building owner with renovation

Post by Rob »

Shagster12 wrote:"If the contractor is a sole prop without workers compensation or if he does have employees and is excluded from his own policy, couldn't he potentially sue for injury as a result of something on the premises not related to his own construction activities?"

Add this thought... If he's excluded from his own comp policy chances are about 99% he won't be out on the job site....
I have yet to meet a small contractor who is active on job sites that is not excluded from his own work comp policy.
Shagster12
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Re: Commercial building owner with renovation

Post by Shagster12 »

[quote="Rob"][quote="lfarringer"]Rob,

My opinion is that your Building owner still needs his own GL policy. Whether he uses insured subs or contracts with them direct merely goes to who pays the most premium for the exposures.

LOU[/quote]

Agreed. So I need to find a carrier that will write a GL policy for him while he has renovation occuring. I sent a request to one underwriter and she sent me an OCP application and I explained just as I did above why that wouldn't work. As of now, no response from her.[/quote]

Ok, so my question on this is, are there other tenants and is there an existing LRO policy? That should take care of the premises liability?
jimmyr1978
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Re: Commercial building owner with renovation

Post by jimmyr1978 »

The insured needs to hire an attorney and get some good indemnity/hold harmless language in the contract between the building owner and the contractor. Then, collect a COI from the contractor showing the building owner as additional insured on the CGL, and showing Work Comp in place. An umbrella with no less than $1 million should also be in place. Contractors have to do this everyday of the week.

For the insured, put in a Builders Risk and vacant building CGL with OCP endorsement. If possible, some commercial carriers will give you a LRO Package policy that states, "buildings under renovation are not considered vacant." The line between gut rehab and renovation can be very blurry, but for a tenant build-out, sometimes you can get a carrier to agree to this.

The problem with your insured getting a GC CGL policy is that he's a "paper contractor," in that he really is not in the business. These can be tough and expensive policies to place, even in the E/S market.
Rob
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Re: Commercial building owner with renovation

Post by Rob »

Shagster12 wrote:
Rob wrote:
lfarringer wrote:Rob,

My opinion is that your Building owner still needs his own GL policy. Whether he uses insured subs or contracts with them direct merely goes to who pays the most premium for the exposures.

LOU
Agreed. So I need to find a carrier that will write a GL policy for him while he has renovation occuring. I sent a request to one underwriter and she sent me an OCP application and I explained just as I did above why that wouldn't work. As of now, no response from her.
Ok, so my question on this is, are there other tenants and is there an existing LRO policy? That should take care of the premises liability?
There are no other tenants. It is an old commercial building with shared walls and each "unit" is individually owned.
Rob
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Re: Commercial building owner with renovation

Post by Rob »

jimmyr1978 wrote:The insured needs to hire an attorney and get some good indemnity/hold harmless language in the contract between the building owner and the contractor. Then, collect a COI from the contractor showing the building owner as additional insured on the CGL, and showing Work Comp in place. An umbrella with no less than $1 million should also be in place. Contractors have to do this everyday of the week.

For the insured, put in a Builders Risk and vacant building CGL with OCP endorsement. If possible, some commercial carriers will give you a LRO Package policy that states, "buildings under renovation are not considered vacant." The line between gut rehab and renovation can be very blurry, but for a tenant build-out, sometimes you can get a carrier to agree to this.

The problem with your insured getting a GC CGL policy is that he's a "paper contractor," in that he really is not in the business. These can be tough and expensive policies to place, even in the E/S market.
An LRO policy would not work since he is not leasing to tenants. The eventual business in the building will be his. Your suggestion is along the lines of my original thought, getting him his own GL policy and having the contractors name him as an a/i for the OCP exposure but its just a matter of how to write the GL.
Shagster12
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Re: Commercial building owner with renovation

Post by Shagster12 »

An LRO policy could still work if he has ownership of the building under his individual name, and the business will be under a seperate entity name. There are many building owners leasing buildings back to their businesses which are under LRO....
lfarringer
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Re: Commercial building owner with renovation

Post by lfarringer »

I agre ewith Shagster!
Rob
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Re: Commercial building owner with renovation

Post by Rob »

Shagster12 wrote:An LRO policy could still work if he has ownership of the building under his individual name, and the business will be under a seperate entity name. There are many building owners leasing buildings back to their businesses which are under LRO....
I agree with you there but the entities are the same.
Shagster12
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Re: Commercial building owner with renovation

Post by Shagster12 »

ok Rob,
last question,
if ownership will be the same for the building and the operation of the new business....
Get a GL policy on a BOP for the new Yogurt shop and be done with it. Should be able to rate on-line with any of the standard markets...
Then hire your GC get your certs... finito....
Insurance101
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Re: Commercial building owner with renovation

Post by Insurance101 »

You need to get a GL policy for the Building Owner. You should be inquiring with your markets for an "Owners Interest" policy for a building under renovation. You absolutely cannot rely on the GC's insurance and that of the GC's subs. First of all, the GC's policy should be able to add the building owner on as an Additional Insured, but you must be carefuly of the AI endorsement being used. You should insist on completed ops coverage within the AI endorsement (such as CG2037). If they have a blanket additional insured endt, then make sure there is a contract between the Owner and GC which requires the GC to name the Owner as AI (as that will be required within the AI endt). Should also be other proper risk transfer in place such as a contract including a Hold Harmless Agreement and the insurance requirements the GC must have in place.

The are so many problems with strictly relying on the GC's policy and not having one in place for the owner as well.

-GC's policy with AI endt only covers the owner (the AI) for negligent acts of the GC, not due to the owners own negligent acts.
-GC's policy could cancel for non-pay
-GC's policy could have certain exclusions and conditions which could severely limit coverage (such as conditions regarding the subs coverage; exclusions for injuries to subs or employees; class limitation endt's; etc...)

The list goes on. I strongly suggest you talk with your wholesalers about an "Owners Interest" GL policy for the owner and work with the owner to make sure they have proper risk transfer protection in place. There are many carriers writing "Owners Interest" policies. Should be no problem securing proper coverage.

Good luck.
Rob
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Re: Commercial building owner with renovation

Post by Rob »

Shagster12 wrote:ok Rob,
last question,
if ownership will be the same for the building and the operation of the new business....
Get a GL policy on a BOP for the new Yogurt shop and be done with it. Should be able to rate on-line with any of the standard markets...
Then hire your GC get your certs... finito....
Thanks for the suggestions Shagster. I considered that as well but one of the challenges is that the building was built in 1877. When he tried to get a policy with Allied (his fiance works for Allied), they declined him because he wasn't able to produce a certificate showing the updates. There are updates but they wanted a written certificate of some sort.

Second little monkey wrench can be found by reading my separate thread about commercial building with paranormal activity. The building may actually become a location for paranormal research rather than a yogurt shop (possible change of plans). I know that sounds crazy but Scottsdale actually shows on their website that they've written something similar. It looks like this will be an E&S account and I will put together an Acord and try to get him a GL policy with renovation occurring. Like I said, I know it sounds crazy but I kind of enjoy this kind of stuff.
Shagster12
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Re: Commercial building owner with renovation

Post by Shagster12 »

Rob,
Whew I'm exhausted.... ;)
Well you're right E&S for this one, and I hope he's a good client 'cause you've already lost money on this deal......:LOL
Good Luck!
Rob
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Re: Commercial building owner with renovation

Post by Rob »

Shagster12 wrote:Rob,
Whew I'm exhausted.... ;)
Well you're right E&S for this one, and I hope he's a good client 'cause you've already lost money on this deal......:LOL
Good Luck!
LOL! Hey, for me its things like this that make this fun and interesting sometimes.

Update: If he goes the route of opening it up for paranormal research, it will not require any renovations :D

Personally, I'm hoping he goes this route :wink:
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