New Home Construction and WRAP Insurance in LA

[Justine M.]

Hey All,

I'm working on a new development project where we are subdividing and entitling a lot that currently has a single family home on it in order to eventually build 4 fee simple town-homes.  The lot is located in Los Angeles and I have been hearing mixed comments on the ownership/partnership buying WRAP insurance for the construction.  Some are saying that undoubtedly I should buy this insurance while others are saying it doesn't make sense for us given that we are only building 4 homes with total hard costs of $1.5 MM.  To make things even more murky, when I'm reading and talking to insurance agents about these policies they are mentioning that there are owner policies, contractor policies, or hybrids and they do not really give me much guidance on which works best. 

As you can tell, I am fairly new to ground-up development so I do want to mitigate as much risk as possible, especially given the 10 year liability tail on SFR construction in California. Any advice or comments from the group would be much appreciated. Additionally, I'm open to any recommendations on WRAP insurance providers you believe I should talk to.