The comprehensive guide to urban renewal insurance - Magdlim

More and more buildings that have undergone urban renewal according to TAMA 38 are appearing in the urban space in Israel. Between the years 2005-2018, 17,907 housing units were occupied in TAMA 38 projects, which were carried out in 955 buildings. Therefore, it would be appropriate to address in a short article an issue that receives less attention from contractors and developers involved in the field, which is the responsibility for "the day after delivery."

A TAMA 38 project, like any construction project, requires recognition of the need to purchase insurance after delivery, including partial delivery. This is because the contract work insurance policy, as its name suggests, insures the developer/contractor only during the performance of the contract work (and in the case of maintenance work, during a maintenance period, defined in time).

After full or partial delivery, the contractor's policy "expires", and with it the insurance solution for risks that existed at the time of delivery, and which will cause damage to the body or property of a third party as a result of a defect in construction, expires.

For example, we are handling an incident that recently occurred in a TAMA 38 project in the north. About three years after the renovated building was delivered, a fire broke out in the main electrical panel. The fire ignited from the bottom up, climbed the electrical shaft and along all floors of the building. The residents, including adults and small children, ran outside in a panic and escaped the flames. Some were injured as a result of the rapid descent of the stairs, some from smoke inhalation, and of course there was extensive damage to the property itself. Only by a miracle did the incident end without any fatal consequences or injuries.

This type of accident does not fall under the scope of the contractor's policy...

Damage to buildings and occupants' belongings in TAMA 38 projects is a common sight during the winter.
"Surprisingly" it turns out that it rains in the winter... and buildings in which the waterproofing has been removed and the appropriate actions for protection from rain have not been taken - are damaged, the developer and contractor are faced with chaos on the site, apartments that must be vacated because they are unfit for use, tenant claims are filed - and insurance does not provide solutions.

Friends, summer is behind us, autumn is beginning, and the Israeli water industry forecasts suggest that this is the second year in a row that we will enjoy an especially rainy season. At least in the first months of the 2019-2020 winter (November – January).

The Meteorological Service believes that this year will be largely similar to the previous year. A year in which, as we recall, we experienced one of the rainiest winters since 2003, and which presented precipitation figures in the central region that were 27% higher than the multi-year average.

Just before the (serious) rain arrives, we saw fit to reiterate and emphasize several essential parameters regarding winter damage and their actual significance for projects according to TAMA 38 and the insurance policies that cover them.

It is important to note that the highlights below do indeed concern aspects of the construction world on the one hand and the insurance world on the other, but they are intended not only for contractors, developers or planners, but also for the tenants themselves...

The high incidence of fatal work accidents in the construction industry is well known. A comprehensive study published only recently (December 2018) under the title "Work Accidents and Occupational Illnesses," by the Ministry of Labor and the National Insurance Institute, found that between 2013 and 2017, construction sites were responsible for approximately 58% of fatal work accidents in Israel.

Not only that, the report shows that one in four of these fatal accidents is caused as part of renovations and/or urban renewal projects (Tama 38). 60% of the accidents are caused in residential construction and about 52% of them in the central region, which is the driving force for Tama 38 projects in Israel.

With such dramatic data, it is very important that companies involved in urban renewal realize that compensation claims filed for a fatal accident can climb to huge sums of millions of shekels. This is especially true in light of the "lost years rule."

In a nutshell, the lost years rule was born in 2004 in the Ettinger ruling (A.A. 140/00), and changed the Gabriel rule (A.A. 295/81), which had ruled the roost until then. The guiding principle of the lost years rule is that there is no distinction between a person who survived after the accident but lost his ability to earn a living (in which case he is clearly entitled to adequate compensation until the date he would have retired), and a person who died as a result of the accident and whose life was cut short.

The Honorable Supreme Court Justice, Eliezer Rivlin, noted in the ruling......

Will damage caused to the environment during the execution of the TAMA 38 project be covered by insurance, what do you need to know and in what cases can you claim? The complete guide to insurance in urban renewal projects.

In July 2017, the media reported on an incident that occurred in central Tel Aviv, which miraculously ended with only property damage and no injuries. An incident in which, following construction work on the TAMA 38 project, a hole opened up in the parking lot of the nearby building, and a car collapsed.

The image of the vehicle trapped in a sinkhole, which was taken in the heart of the city and in a place where citizens (including children and adults) pass dozens of times a day, aroused shock and fear. Not only in the eyes of ordinary citizens, but also among contractors and developers who promote urban renewal projects, and who know (or should know) the risks inherent in construction work to nearby buildings and the environment.

The event in Tel Aviv, like many other cases, most of which do not make the headlines, has turned a spotlight on insurance for TAMA 38 projects. Projects that are, naturally, carried out in the heart of the urban space.

The insurance aspects that must be taken into account when entering into an urban renewal project must also include consideration of damage that may be caused to nearby buildings or the environment. This is because damage to neighboring buildings and their yards is common, very common.

TAMA 38 is in tremendous momentum. According to official data from the Government Authority for Urban Renewal (as of 2017, as data for 2018 has not yet been published), over 11,000 housing units have already been populated within its framework in approximately 650 buildings across the country (not just in Tel Aviv or the Central District).

However, despite the impressive numbers, every TAMA 38 project is largely at "high risk" of delays, even compared to "regular" residential construction projects. As the CEO of an insurance agency specializing in construction insurance in general, and TAMA 38 insurance in particular, I am intimately familiar with the phenomenon and the various underlying reasons.

In the next article, I will examine the issue from the insurance aspect. What are the implications of those delays on the contractor's policy, which was purchased under a specific primary insured name and for a limited period of time? (Generally, about 24 to 36 months).
Change of contractors – change of insureds?

First, the first thing to know is that many TAMA 38 projects are characterized by a turnover of contractors, and often more than one contractor is replaced. Second, even the developers do not always manage to complete the project they committed to....

"How to deal with the private apartment insurance of apartment owners in the TAMA 38/1 project (strengthening and expansion), within which, as is known, the tenants can continue to live in the building while the work is being carried out"

 As the CEO of an insurance agency specializing in construction insurance, I am occasionally asked questions by developers, contractors, planners, and law firms that accompany TAMA 38 projects (in all its variations).

 I will begin by saying that TAMA 38 insurance is one of the most complex insurances and requires control over the details, as a professional error may result in a lot of bloodshed on the day of the order.

 One of the common questions I frequently encounter is "How to deal with the private apartment insurance of apartment owners in the TAMA 38/1 project (reinforcement and expansion), within which, as is known, the tenants can continue to live in the building while the work is being carried out." This time, I will take advantage of the honorable platform given to me on the "Magdilim" website to answer this issue.

 In fact, what the applicants are asking to know is whether the apartment insurance of the apartment owners in the TAMA 38/1/3 project (reinforcement and expansion) in the private policy, which was purchased by them before the start of the project and according to the standard apartment insurance policy, covers damages that will be caused as a result of the work or during it.

Important clarification – the standard apartment policy excludes coverage in an unoccupied apartment, unless the tenant purchases a suitable extension and meets the cumulative conditions detailed therein. In our case....

Many tenants who enter a TAMA 38/1 (reinforcement and expansion) project ask "along the way" to also carry out renovations in their apartment. After all, there is nothing more logical than that. In parallel with the massive work being carried out in the building itself for urban renewal, the property owners are doing "two renovations in one fell swoop" and are also undergoing personal renewal.

How can you prepare in advance for insurance coverage for winter damage, are developers and contractors covered, and when do insurance companies recognize extreme weather damage? All the answers and tips in the complete guide to insurance estimates for the winter season.

Winter is approaching and, like every year, the construction industry is going on the defensive. This is especially true in occupied buildings where expansion and renovation projects are being carried out within the framework of TAMA 38/1. Both because these are projects that, by their very nature, require the removal of roof tiles or waterproofing at some point, and because rain and wind damage can harm any construction site, even during routine work.

Furthermore, in terms of the geographical distribution of urban renewal projects, the implementation reports published over the years by the Planning Directorate clearly indicate that the lion's share of construction is in the Tel Aviv, Central and Haifa districts. That is, most of the projects are being built in the rainiest areas of the country (as can be seen in the map below). According to the Meteorological Service, the Central region experiences approximately 45 rainy days each year, including storms and gales (the differences between a storm and a gale are determined by wind speed).

This article is intended primarily for the tenants' committees that handle the establishment and execution of the TAMA 38 project and the lawyers who represent them. It is important to understand: the field of construction and its great complexity in general, and the field of TAMA 38 and its special characteristics in particular - are new to the tenants. They have never dealt with it, this is their first project and probably their last, and naturally, in the vast majority of cases, they do not understand anything at all in the field of construction and especially in the insurance field of the project. In my experience, sometimes even the representatives (lawyers) do not delve into the material in a sufficiently in-depth and satisfactory manner. In light of all this

This article is intended primarily for the tenants' committees that handle the establishment and execution of the TAMA 38 project and the lawyers who represent them. It is important to understand: the field of construction and its great complexity in general, and the field of TAMA 38 and its special characteristics in particular - are new to the tenants. They have never dealt with it, this is their first project and probably their last, and naturally, in the vast majority of cases, they do not understand anything at all in the field of construction and especially in the insurance field of the project. In my experience, sometimes even the representatives (lawyers) do not delve into the material in a sufficiently in-depth and satisfactory manner. In light of all this