The LHBA General Liability Trust is now able to bind coverage for builders. 

 The Trust is its own separate legal entity, with its own Board of Trustees who governs the entity on behalf of the indemnities who own the Trust.  Unlike an insurance company, the Trust is owned and controlled by the builders, all of whom are required to be members of LHBA.  Since the members of the Trust own the Trust, it can pay dividends once surplus monies are available to return.  The Trust’s capitalization is met through initial premiums and the potential assessment of indemnities.  The potential assessment is capped at 50% of the applicable contributions (similar to premium) of members for a particular trust year.  The Trust offers a value to the builder that cannot be matched by any other general liability provider and offers general liability at cost.

The Trust has specific reinsurance with Markel Insurance Company, an A rated carrier.  On any particular claim, the Trust pays the first $250,000 and Markel then pays the remainder per claim.  The Trust offers limits of $500,000 per occurance\$1 million aggregate, and $1 million per occurrence\$2 million aggregate. 

As of December 1, 2003, 22 agencies have signed agency agreements and are able to submit applications to the Trust’s third party administrator, Midlands Management, located in Oklahoma City.  As Administrator, Midlands implements the declared policies, procedures and directives of the Board and provides for the day-to-day administration of the Trust.  Midlands is contracted to do all services including underwriting, issuance of the general liability agreements, accounting, audit, loss control and claims.  Midlands has received approximately 516 submissions and the estimated premium to date is $2.9 million.  The program is proving to be a huge success for the homebuilding industry.