Lack of detailed insurance requirements – here you have damage.

Conditions Precedent for Executing a TAMA 38 Deal and Understanding Their Importance on the Way to a Successful Transaction

Without a doubt, this is a fundamental matter, and much has been written about it repeatedly. However, the issue of insurance in TAMA 38 projects often receives insufficient attention, and I have frequently observed significant gaps in critical areas.

One example among many is the damage caused to numerous buildings and their contents in TAMA 38 projects due to a sudden and unexpected storm in central Israel in May 2014.

Is there coverage?Insurance coverage for natural damage during the summer may seem straightforward, as it is a “physical and unforeseen event,” according to the policy definition.

However, in May? The policy must include ALL RISK coverage for the existing structure; otherwise, the natural damage clause does not apply at all.

Lessons are not always learnedIn many cases, due to lack of knowledge, a desire to save money, or the tendency of some insurance companies to avoid providing full coverage for the existing structure, people settle for a “property under work” extension, which does not cover natural damage at all. And the emphasis here is precisely on the desire to save money.

This is exactly what happened with a developer who insured one of my projects at that time, while for the second project (which began about a month later), the developer, pressured by the contractor, agreed that the contractor would insure it through another insurance agent, saving a few thousand shekels.

Unexpected Summer Storm – May 2014In May 2014, due to the intensity of the sudden storm, both buildings were significantly damaged: the roof waterproofing had already been removed, and aluminum windows and frames were in the process of replacement—the damages were severe.

Our policy, which included uncompromising coverage and cost slightly more, paid a very substantial amount, whereas the second policy (incidentally, with the same insurance company) provided no solution at all.