Essential reading for general contractors, specialty trades, and design-build firms working in Yavapai County.
What’s Changing in 2025?
- Premiums jump 9–15 % on the completed-operations (CO) portion of general-liability (GL) policies.
- New exclusions appear for wildfire smoke damage, expanded-soil movement, and multi-unit residential projects.
- Higher limits demanded on contracts with HOAs and large custom-home GCs—many now ask for $2 M policy aggregates instead of $1 M.
Why the Sudden Focus on Completed-Ops?
- Spike in construction-defect claims. Water-intrusion suits and soil-settlement disputes rose 26 % statewide in 2024.
- Arizona’s strict liability landscape. The state’s eight-year statute of repose (A.R.S. 12-552) exposes builders long after project close-out.
- Wildfire rebuild rush. Post-2022 Crooks & Goodwin Fires generated rapid builds—defect claims surface as homes settle.
- Reinsurance hard market. Global treaties for construction liability renewed at +10 % in January 2025, forcing carrier price hikes.
Who Feels the Pinch?
- Custom-home GCs building above 5,000 sq ft in the WUI—heightened exposure to wildfire-smoke infiltration claims.
- Roofers & framers—carriers add separate CO aggregates for decking and fire-rated assemblies.
- Subcontractors without written QC programs—lack of documentation triggers higher “severity modifiers.”
Where Are the Hidden Gaps?
- Tract-home limitation endorsements. Many GL policies cap the number of units before a premium jump—check any “tract” definition if bidding multi-lot work.
- Interior water-intrusion exclusions. Look for wording that removes coverage once roofing or siding is certified “complete.”
- EIFS/Stucco carve-outs. Prescott’s dry climate still sees mold claims—verify if your carrier excludes synthetic stucco.
When Should You Review Coverage?
- Before signing any subcontract or prime contract. Owner-written agreements often require CO coverage for up to 10 years.
- 90–120 days pre-renewal. Loss-run analysis and claim-prevention proof take time to influence rates.
- Immediately after major safety or QC upgrades. Photo logs, third-party inspections, and drone-roof reports can qualify for mid-term credits.
How to Control Costs Without Sacrificing Protection
- Create a documented QC plan. Include moisture-barrier photos, pre-pour soil reports, and roof-deck inspections.
- Bundle GL with project-specific excess limits. A $2 M excess layer often prices cheaper than pushing primary CO limits higher.
- Negotiate “per-project aggregate” wording. Prevents a single claim from eating the annual CO limit across multiple jobs.
- Use insured subcontractors. Require equal or higher CO limits and keep certificates up to date; carrier audits bill you for uncovered subs.
- Add a disciplined “warranty walk-back” schedule. Regular post-completion inspections catch issues early—insurers reward proactive defect management.
Key Take-Aways for Prescott Contractors
- Completed-ops pricing is rising faster than material costs—plan for double-digit increases through 2026.
- Contract requirements drive limits. Read the fine print before accepting a job that mandates 10-year CO coverage or higher aggregates.
- Loss-control documentation (QC photos, soil tests, water-barrier certifications) is your best leverage for lower rates.
Sources
- Arizona Registrar of Contractors – Complaint & Construction-Defect Statistics (2025)
- Arizona Revised Statutes §12-552 – Statute of Repose for Improvements to Real Property
- Construction Executive – 2025 Outlook: Construction-Defect Litigation
- IRMI – Completed-Operations Coverage Tips (2025 update)
- Southwest Fire Management – Crooks Fire After-Action Report (2023)
- PLRB – Soil Expansion Claims in Arizona (April 2025)
- Reinsurance News – Construction Liability Rates Harden (Jan 2025)
Not sure if your policy still meets 2025 contract specs? Inszone’s Prescott construction team can review your completed-operations wording and find cost-effective solutions before bid season.
Erika Roys
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