Builders Risk / Developer Turnover

While a community is being built or a building is being converted to condominiums, the developer (the declarant) carries builders risk coverage, sometimes called course-of-construction, which insures the work in progress against fire, wind, theft, and other physical loss until the project is complete. Builders risk is a temporary policy that expires when construction ends. When the developer hands control of the association to the unit owners, called turnover or transition, the association has to have its own master property and liability program in force. The risk lives in the seam between those two programs. There is no statute that dictates how this handoff happens; it is governed by the developer's contract, the governing documents, and community-association transition best practice, including the independent transition study that groups such as the Community Associations Institute (CAI) recommend a new board commission at turnover.

The moment control passes from the developer to the owner-elected board is the single most exposed point in a community's insurance life, because two things can go wrong at once. First, the temporary builders risk policy can lapse before the association master policy is bound, leaving a coverage gap on a brand-new asset. Second, the developer may have carried thin or placeholder coverage that was never sized to the completed, occupied community. A new board should not assume the coverage it inherits is adequate or even current. Commission an independent transition study that reviews insurance alongside the construction, budget, and reserve handoff, confirm the master property and liability program is bound with no gap from the builders risk expiration, and preserve the construction-defect and warranty rights that a rushed transition can quietly waive. Sequence the master policy binding to the builders risk expiration date, not to the closing calendar.

This is a transition-governance and timing item more than a single coverage term, so there is no program indicator that flags it; the exposure is procedural. The specialty community-association markets can bind the master property and liability program to take effect the day builders risk expires, but only if the board engages early, so the practical failure mode is a late-arriving board discovering the gap after the fact. Fold the insurance review into the broader transition study rather than treating it as a standalone renewal. Citation basis: no controlling statute; qualitative developer-transition and transition-study best practice (CAI). Honest lint note: no primary statute or Selling Guide section applies to this clause by design.