Passage of Senate Bill 800 and Assembly Bill 758 -- the former offering litigation alternatives for owners and builders, and the latter altering the scope of indemnity faced by subcontractors -- made the necessity of contractor insurance a little less painful.
Both laws created a "better environment for insurance carriers," said Marc Kaplan, president of Aspen Insurance Brokers Inc.
As a board member on the Home Builder Council (HBC) of the Building Industry Association of San Diego County (BIA), and member BIA's Risk Management Committee, Kaplan has a comprehensive understanding of insurance laws and current requirements. He began a career in construction insurance in 1988 and formed Aspen in 1992.
SB 800 provided clarity for builders and homeowners in disputes. It improved communication and helped to curb runaway lawsuits.
"California seemed to change into a less litigious state due to changes in the law," Kaplan said.
AB 758 put a stop to Type I indemnity agreements, which caused general liability insurance rates to go through the roof.
Before AB 758, insurance companies assessed the risk of insuring work, factoring in possible liability of subcontractors. The result: Subcontractors were burdened with responsibility for others' mistakes, which meant endless litigation and insurmountable rates.
Due to high risks, traditional insurance carriers became resistant or unwilling to cover condominium projects. Insurance companies lost their appetite for the Golden State. "But now they want to do business in California," Kaplan said. Aspen markets the best "wrap programs" for developers and general contractors of condo projects, he said. The developer pays the premium on a wrap policy, which insures everybody on the project. Aspen also works with trade contractors, to ensure their interests are protected, "primarily to know the limits, to make sure limits are not too low," Kaplan said. "Clients need to be sure that they are getting good service all around in their contracts." The issue today is not so much cost of insurance but the downturn in the economy and slowed construction, said Kaplan. "Some of these guys are fighting to stay alive," he explained.
His work as a Construction Risk and Insurance Specialist (CRIS) is to provide the service and attention these contractors deserve, Kaplan said.
While Aspen represents many insurance companies, the organization is not beholden to any of them. This means more options and better recommendations to meet specific client needs.
"We end up putting ourselves in the position of teacher," he said. "We sit down with each client and make sure they know what they are purchasing."
Aspen counsels clients and familiarizes them with policies and coverage.
"We have relationships with all the right companies," Kaplan said. "We know where to go." The company also scours the marketplace for options.
"On each of our marketing visits we'll show them every quote that we've gotten from top to bottom," Kaplan said. "We often explain why the least expensive quote is not always the best one."
Aspen affiliates include the California Department of Industrial Relations, California Department of Insurance, Division of Occupational Safety and Health (Cal/OSHA), Occupational Safety and Health Administration (OSHA), the San Diego Regional Chamber of Commerce, State Compensation Fund of California, Allstate, Progressive, Hartford and Zenith.
Aspen's construction insurance team delivers loss control programs -- including safety training and claims management -- certificates, general liability insurance, wrap policies, workers' compensation programs, license bid and performance bonds, among other services.
Business coverage includes interior contents and tenant improvements, business interruption and/or loss of income, computers, general and professional liability, employment practices liability, commercial auto, commercial umbrella liability and workers' compensation.
Aspen brought in "right around $900,000" in revenue in the last fiscal year and hopes to increase that figure to $1.1 million or $1.2 million in the next year, according to Kaplan.
Through the BIA, Aspen's connections and relationships with trade contractors continue to grow.
Kaplan and the company are committed to addressing the issues that face the construction industry in California. As a member of the BIA, Aspen works to develop discounted insurance programs for members, including a successful discounted group workers' compensation program and business auto program.
Aspen hangs its hat on creating lasting relationships, Kaplan said.
"We follow up, return calls quickly," he said.
"We have a great reputation for follow-through and service."
Chung Klam is a San Diego-based freelance writer.