What is a tract home or multi-unit residential exclusion?
It is an endorsement that removes coverage for work on housing tracts, condominiums, townhomes and apartment buildings. Carriers add it because residential development produces construction defect claims that arrive as class actions and homeowners association suits years after the work is done.
Tell us the situation.
A licensed human replies the same business day — not an auto-responder, and not five producers calling at once. We shop it across our carriers and tell you if the policy you already have is the right one.
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The detail
Multi-unit and tract housing residential exclusions are commonly attached to contractor general liability policies, one widely used version being form CG 77 44.
IA Magazine, What Falls Under the Multi-Unit and Tract Housing Residential Exclusion
Residential tract, condominium and townhome projects are treated as higher risk than commercial work because of the frequency of construction defect class actions and homeowners association claims arising from them.
Sadler & Company, Problem General Liability Exclusions for Contractors
Such exclusions typically apply to both ongoing and completed operations, so the removal of coverage outlives the job.
IA Magazine, What Falls Under the Multi-Unit and Tract Housing Residential Exclusion
What this means for you
- This is the exclusion that makes the rest of the paperwork irrelevant. Additional insured, primary and non-contributory and a per-project aggregate are all attached to a policy that does not respond to the job at all.
- It is broader than people expect. "Arising out of" language can reach a subcontractor whose own scope was small, on a development they thought of as a handful of houses.
- If any part of your work is tract, condominium, townhome or apartment, the exclusion has to be found before it is relied on. It is not always obvious on the declarations and is often several pages into the forms.
- The coverage exists — it is placed with carriers that will write residential rather than by arguing with one that will not. Expect it to be underwritten on your defect history, your subcontractor agreements and the certificates you collect from your own subs.
Related questions
- Why do carriers dislike tract homes specifically?
- Because the loss does not arrive alone. A defect repeated across a development produces claims from many homeowners at once, often organised as a class action or brought by a homeowners association, and the defence cost is incurred on every one of them. A single custom home that has the same defect is one claim.
- I only did a few units on a large development. Does it still apply?
- Very possibly. These exclusions usually attach to the character of the project rather than the size of your scope, and "arising out of" wording is deliberately broad. A subcontractor with a modest contract on a large residential development is exactly who discovers this at claim time.
- Can the exclusion be removed?
- Sometimes it can be bought back, and more often the answer is a different carrier — one whose appetite includes residential rather than one that has written it out. Which of those applies depends on your loss history and the mix of your work, and it is a placement question rather than a paperwork one.
Need this handled?
We do the filings, and we place the accounts other brokers decline — lapsed authority, claims history, new ventures. Tell us the situation and a licensed human replies the same business day.