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Building a master planned community of new homes has many risks, including property damage, construction material loss, equipment damage and more. However, there are steps throughout the planning process that can minimize, and even eliminate, these exposures.
A master planned community begins with the infrastructure. It is important to keep in mind how weather can impact this process. The development of infrastructure includes sitework, grading, drainage, and the installation of underground utilities. Once the infrastructure is completed, the building of homes commences, and new risks begin to present. Here are a few exposures to be aware of when building commences:
It’s not uncommon for homes to be tagged with graffiti, equipment to be stolen, or fire to be set on/around buildings in a development. The biggest risk to homebuilders is fire with damages to sites under construction resulting in millions of dollars in losses over the last five years.1 Fires are at heightened risk to occur when there is smoking, welding, or use of flammable materials around the site, while theft and vandalism are more likely to occur when workers leave equipment unattended and there is open access to the building grounds.
It’s important for subcontractors to know where they plan to store equipment and materials during construction. Storage should remain in low-hazard areas and at the end of every workday, dumpsters should be emptied. It is vital that debris, scrap materials, and trash are consistently and safely removed on a scheduled basis due to risk of fire or injury. It’s recommended that homebuilders train contractors on debris removal since some materials need special disposal or can be flammable.
High quality construction depends on high quality contractors and tradespeople. The best way to ensure this in hiring is to request documentation on background and training levels for all new subcontractors. New subcontractors should be required to sign off on homebuilder’s site-specific safety procedures and must be in compliance with the applicable state, city, municipal design, and building codes.
Pre-planned sequencing and scheduling of subcontractor work assignments help limit property damage. Effective sequencing can help prevent water damage, property damage, injury, and risk of costly construction delays.
There are additional steps to help homebuilders reduce risk, including posting emergency phone numbers, requiring emergency training, doing routine inspections, and installing surveillance cameras and locks.
Make sure to identify any present risks and take the proper steps to mitigate or eliminate the exposures. Disregarding these exposures can lead to costs affecting the overall profitability of the master planned community. In addition, consider an insurance company that has experience with homebuilders specifically when evaluating builders risk insurance options for these types of projects. The expertise insurers bring to the table can be a valuable risk management resource for the homebuilder.
To learn more about building master planned communities and how to minimize the associated risks, download Chubb’s whitepaper, A Start-To-Finish Overview of Risks in Building Master Planned Communities.
Deborah Grooms, PCU, AMIM, is a Senior Vice President, Major Accounts, Inland Marine. She is based in Atlanta and is the Chubb product line leader for Homebuilders.
1 National Fire Protection Association, “Fires in Structures Under Construction, Undergoing Major Renovation, or Being Demolished.” April 2017.
The opinions and positions expressed are the authors’ own and not those of Chubb. The information and/ or data provided herein is for informational purposes only and is not a substitute for professional advice. Insurance coverage is subject to the language of the policies as issued.