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Prescott Builders: Completed-Operations Insurance Is Tightening—What Should Every Contractor Check Before Signing a 2025 Contract?

9 June 2025

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

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

VP – Arizona

Erika Roys is the VP of Arizona at Inszone Insurance Services. Erika is originally from Lima, Peru, where she attended Law School at UNIFE University. Erika began her professional career in the insurance industry in 2010 as an Insurance Representative for a reputable insurance agency in Pacific Grove, CA. She brings more than a decade of experience in both personal and commercial lines. Erika currently holds a Certification in Commercial Lines (CLIC) and a Workers’ Compensation Insurance Professional (WCIP) designation and is looking forward to expanding her education. She has been in management roles for almost a decade leading Commercial Lines Teams for well-known agencies. Erika has also directed the implementation of new procedures, software, and third-party services for her prior agencies to help improve their staff efficiency.

Erika is very passionate about insurance. She enjoys assisting her clients with risk analysis, providing the most appropriate coverages and best rates possible. As an established leader, Erika understands trust and support are fundamental factors to a successful team. Her continued focus is to mentor her team in their professional growth in Commercial Lines.

Erika loves music and taught herself to play the guitar at the age of 15. She enjoys road trips and vacations at mountain retreats with her husband and two fur-babies, Junior & Oscar, and visiting her family in her homeland, Peru.

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