As Los Angeles continues the ambitious task of rebuilding fire-affected neighborhoods, one critical question arises: are homeowners, developers, and banks truly protected during construction?
I sat down with Greg Econn, Executive Vice Chairman of Venbrook Insurance Services and Chair of Steadfast LA’s insurance board, to unpack the risks, solutions, and innovations everyone navigating a rebuild should understand.
Greg brings five decades of experience in insurance broking and is widely recognized for his expertise across all facets of real estate coverage and construction insurance. He leads Venbrook’s Real Estate Practice, delivering innovative products and services to property owners, developers, and contractors. Beyond his executive leadership, Greg created a manuscript real estate risk program for residential and commercial properties and taught for over thirty years at UCLA Extension, sharing his insights on real estate, construction insurance, and bonding.
When I asked him why builder’s risk insurance is so vital for these rebuilds, Greg was clear: this type of insurance is mandatory for anyone using a construction loan, and it protects against risks during construction—including wildfires, water damage, theft, and more—before a homeowner’s standard policy takes over. Without it, both homeowners and banks are exposed to substantial financial risks.
He gave a tangible example: imagine a homeowner with a $2 million construction loan on a property where the land is valued at $3 million. If their house is lost and they start rebuilding without builder’s risk insurance, they are taking a serious and unnecessary risk. This not only leaves the homeowner economically vulnerable but also jeopardizes the bank’s collateral.
But not all policies are created equal. Greg emphasized that price does not always reflect protection. Some lower-cost policies exclude key hazards like wildfire, flood, or theft during construction. “We’ve seen rates at $0.41–$0.42 per thousand annually—but they often sub-limit or outright exclude critical coverages,” he noted. The message was clear: homeowners and developers must review policy terms carefully rather than focusing on price alone.
To address these gaps, Steadfast LA is developing a builder’s risk product with established rates and comprehensive coverage, backed by Lloyd’s of London. An AI-driven, no-touch application is also in development to streamline the insurance process for homeowners and contractors, with Amazon engineers assisting in configuring the platform.
The rebuild effort is already underway with several major developers and builders engaged. A consortium is working on 600 homes, with general contractor pricing around $500 per square foot depending on scale. In the Palisades, 53 homes are under reconstruction, but only 15 have confirmed builder’s risk coverage. Key players include PacQuest, Builders Alliance, Samara, and Genesis.
Beyond insurance, mitigation strategies are being considered to reduce risk during construction, including satellite monitoring, fire-resistant materials, and even private firefighters. Owner Controlled Insurance Programs (OCIP) are being developed to cover liability for all parties involved, including a ten-year construction defect component after project completion. Environmental compliance is another critical piece: soil testing is required under state, city, and county guidelines, and contamination coverage is typically not included in standard homeowner policies. In some cases, a separate pollution policy may be required, even if FEMA handled debris removal.
Econn cautioned that there are urgent risks homeowners need to be aware of. Many have yet to secure builder’s risk insurance, and low-cost policies may leave them exposed to major hazards. Furthermore, the timeline for launching Steadfast’s AI-driven insurance platform is not finalized, which could affect the availability of coverage for some homeowners.
His advice is straightforward but crucial: don’t assume past insurance coverage is enough. Review policy terms carefully, secure builder’s risk insurance early, and stay actively engaged with your developer, contractor, or bank. This is about protecting your home, your investment, and the broader community during a critical phase of Los Angeles’ rebuild.
“Don’t gamble with your home or your investment. Take action now to protect yourself during this rebuild—your future depends on it,” Econn recommends.
