DEVELOPER
TRANSITION INSURANCE
CONSTRUCTION DEFECTS SURFACE JUST AS VOLUNTEERS TAKE OVER.
Roofing failures, water intrusion, foundation issues, and code violations often surface after the builder hands over control.
Deciding whether to pursue defect claims, how to fund reserves, and how to handle developer-era contracts — every early decision creates liability.
Developer-era reserve contributions are often based on optimistic assumptions. The true maintenance burden surfaces after transition.
Statutory and express warranties have fixed time limits. The board must document and file claims before deadlines expire.
The transition from developer control to owner governance is the single most consequential period in a community association's life. The developer's builder's risk and general contractor coverage phase out. The association must stand up its own insurance program — master property, general liability, D&O, fidelity, umbrella — often while simultaneously discovering construction defects the developer left behind. Roofing failures, water intrusion through exterior walls, foundation settlement, and plumbing defects tend to surface in the first two to five years after construction, precisely when a new volunteer board is learning to govern.
Kelly Insurance Group builds transition-period programs that address the dual challenge: protecting the new association going forward while maintaining the coverage foundation needed to pursue construction defect claims against the developer. We coordinate D&O coverage from day one so the new board is protected during every early decision.
TAP EACH PHASE TO SEE THE INSURANCE IMPLICATIONS.
The transition unfolds in phases. Each one carries different coverage needs. Tap to explore.
THE BOARD'S FIRST MAJOR DECISION IS OFTEN THE BIGGEST.
When construction defects surface after transition, the new board faces a decision that defines the association's financial future: pursue the developer through litigation, negotiate a settlement, or absorb the repair costs through special assessments. Each path creates D&O exposure for the volunteer directors. Pursuing litigation requires the board to hire attorneys, engage experts, and manage a multi-year process. Choosing not to pursue may expose directors to claims from owners who believe the board failed its fiduciary duty. Kelly Insurance Group ensures the D&O policy is structured to cover the board's decisions during this critical period, regardless of which path they choose.
MORE ASSOCIATION COVERAGE
DEVELOPER TRANSITION COVERAGE — ANSWERED.
WHEN DOES THE DEVELOPER HAND OVER INSURANCE RESPONSIBILITY?
Typically when a specified percentage of units are sold (often 75%) or a time period expires. The association must have its own program in force before the handoff. The developer's coverage ends at transition.
WHAT CONSTRUCTION DEFECT EXPOSURE DOES THE ASSOCIATION FACE?
Roofing failures, water intrusion, foundation issues, and code violations often surface post-transition. The association may need to pursue the developer's insurance while maintaining its own program. D&O for the new board is critical.
SHOULD THE ASSOCIATION GET A RESERVE STUDY BEFORE TRANSITION?
Essential. The developer's reserve contributions may be based on optimistic assumptions. The study establishes true conditions and funding needs, directly affecting the insurance program's structure.
WHAT INSURANCE SHOULD THE DEVELOPER MAINTAIN DURING TRANSITION?
CGL, completed operations, professional liability, and builder's risk until transition is final. The association should obtain copies and confirm additional-insured status where appropriate.
DOES THE NEW BOARD NEED D&O IMMEDIATELY?
From the moment the owner-elected board takes control. The first major decisions — defect claims, reserves, developer contracts — all create D&O exposure. Waiting leaves volunteers personally exposed during the highest-risk period.
WHAT HAPPENS TO WARRANTIES WHEN THE DEVELOPER EXITS?
Statutory and express warranties continue for their specified terms. The board must document defects and file claims before deadlines expire. D&O covers the board's decisions about pursuing or settling warranty claims.
PROTECT YOUR ASSOCIATION THROUGH THE TRANSITION.
Kelly Insurance Group builds transition-period programs that protect new boards from day one. Since 1881.
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