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A partnership purchases a house and then they do all of the remodeling. They are not General contractors and do all of the work themselves. What is the proper insurance for their partnership entity to purchase to insure their operation as a business as they will be doing this again? They currently bought a dwelling fire policy with OL&T liability but their attorney said that may not be right since one of the partners occupies the dwelling. Opinions?

Rob,
You need to turn this one over to the commercial dept. Scottsdale will do this for you adding and deleting the properties as they buy & sell.

CATHIEA wrote:Rob,
You need to turn this one over to the commercial dept. Scottsdale will do this for you adding and deleting the properties as they buy & sell.

I am the commercial dept. The issue is that it would be a dwelling policy with OLT with one of the partners as an occupant which can be problematic.

Interesting. A dwelling fire with OLT isn't the proper way to cover this, the OLT portion isn't intended to cover exposures from contractors. But since the clients are not licensed contractors, I don't know who would be willing to provide Property in the COC or the liability for the COC. Good luck.

LadyBroker wrote:Interesting. A dwelling fire with OLT isn't the proper way to cover this, the OLT portion isn't intended to cover exposures from contractors. But since the clients are not licensed contractors, I don't know who would be willing to provide Property in the COC or the liability for the COC. Good luck.

Exactly. I'm not their current broker but he came to me for this business plus they are starting a separate entity which is a home inspection firm which and they need E&O which I write all the time. Also interested in key man life and group health and I'm life licensed and can do this as well. He wants one broker who knows his business etc. The only one I'm not interested in is the one I posted about however I would like to help him with his insurance problem and get the account. Anyone else?

Rob:

Is one of the partners actually living in it as they remodel it? Is the home owned by individuals or an entity?

njquote wrote:Rob:

Is one of the partners actually living in it as they remodel it? Is the home owned by individuals or an entity?

The current home is lived in by one of the partners of the entity and the home is owned by the other partner. However, the next one they purchase will be owned by the entity and this is what he is seeking coverage for.

Off the top o my head...I'm thinking they also need OCP coverage for their exposure as the "contractor"....

You may have a bigger problem. As I read the following (State of California) Business and Professions Code, Section 7044 provides for an exemption from the contractor's license requirements for "owner/builders". Section 7044 reads, in part, as follows:

Your prospect/client appears to be breaking the law. You may want to research. Alan.

Lee3632005 wrote:You may have a bigger problem. As I read the following (State of California) Business and Professions Code, Section 7044 provides for an exemption from the contractor's license requirements for "owner/builders". Section 7044 reads, in part, as follows:

Your prospect/client appears to be breaking the law. You may want to research. Alan.

You didn't finish citing the code.

You're right. I found the code and it looks like he is in violation. Now I need to put this to him diplomatically. It says:

7044. This chapter does not apply to any of the following:
(a) An owner of property, building or improving structures
thereon, or appurtenances thereto, who does the work himself or
herself or through his or her own employees with wages as their sole
compensation, provided none of the structures, with or without the
appurtenances thereto, are intended or offered for sale.
(b) An owner of property, building or improving structures
thereon, or appurtenances thereto, who contracts for such a project
with a subcontractor or subcontractors licensed pursuant to this
chapter. However, this exemption shall apply to the construction of
single-family residential structures only if four or fewer of these
structures are intended or offered for sale in a calendar year. This
limitation shall not apply if the owner of property contracts with a
general contractor for the construction.
(c) A homeowner improving his or her principal place of residence
or appurtenances thereto, provided that all of the following
conditions exist:
(1) The work is performed prior to sale.
(2) The homeowner has actually resided in the residence for the 12
months prior to completion of the work.
(3) The homeowner has not availed himself or herself of the
exemption in this subdivision on more than two structures more than
once during any three-year period.
In all actions brought under this chapter, proof of the sale or
offering for sale of any such structure by the owner-builder within
one year after completion of same constitutes a rebuttable
presumption affecting the burden of proof that such structure was
undertaken for purposes of sale. Except as otherwise provided in
this section, proof of the sale or offering for sale of five or more
structures by the owner-builder within one year after completion
constitutes a conclusive presumption that the structures were
undertaken for purposes of sale.
In addition to all other remedies, any (1) licensed contractor, or
association of contractors, (2) labor organization, (3) consumer
affected by the violation, (4) district attorney, or (5) the Attorney
General, shall be entitled to seek injunctive relief prohibiting any
violation of this chapter by an owner-builder who is neither
licensed nor exempted from licensure by this section or any other
section according to the provisions specified in Section 7028.3 or
Section 7028.4. The plaintiff in any such action shall not be
required to prove irreparable injury and shall be entitled to
attorneys' fees and all costs incurred in the prosecution of such
action, provided the plaintiff is the prevailing party. The
defendant in any such action, shall be entitled to attorneys' fees
and all costs incurred in the defense against such action, provided
the defendant is the prevailing party.
The registrar pursuant to Section 7090 may take disciplinary
action as provided in this chapter against any person whenever the
grounds or cause for disciplinary action arose upon any project
undertaken by him or her as a licensee licensed pursuant to this
chapter.
Any person, firm, or corporation which has violated Section 7028
by engaging in contracting work as an owner-builder without having a
license or an exemption from licensure under this section or any
other section shall not be entitled to become a licensee under this
chapter for a period of one year following the violation.

How are you covering your clients on a professional liability basis. None of these policies extend out to cover them for their professional liability. If they don't want it get something to cover your but that you offered it.

jtabosida wrote:How are you covering your clients on a professional liability basis. None of these policies extend out to cover them for their professional liability. If they don't want it get something to cover your but that you offered it.

What professional liability exposure are you referring to?

Lee3632005 wrote:You may have a bigger problem. As I read the following (State of California) Business and Professions Code, Section 7044 provides for an exemption from the contractor's license requirements for "owner/builders". Section 7044 reads, in part, as follows:

Your prospect/client appears to be breaking the law. You may want to research. Alan.

I discovered that they have applied for their contractor's license. So now I just need to find a market that will cover them. Since they have a real estate license and are doing that activity as well, it is a problem because the carriers that insure small artisan contractors won't take this if they have an interest in the properties they are working on and/or because of the real estate exposure. The companies that may do it are minimum $17,500 and they are too small to handle that.

Rob, you are such a nice guy! We get these type of clients all day long - they want to play with the big boys but pay with the little guys. Give them the quote that fits their exposure - if they take it great - if not move on. Every minute you spend on this is spent income. Sorry if that sounds harsh - but remember the housing market is slowing and anyone getting in now has to pay the price.