Builders’ Risk

Define the intent of the policy Understand exposures Discuss why owner should purchase the policy Who is Insured? Underwriting Information Coverages E & O Avoidance Questions Discussion Points

What is a Builders’ Risk Policy? Provides project specific coverage for individual construction projects requiring a separate policy. Coverage should be written on a completed value basis, meaning that the amount of insurance equals the completed value of the building under construction. This approach has the advantage of affording full coverage during the various stages of construction.

Understand your client’s needs and exposure Some projects can be covered under your existing property form Understand the exposure Read the form Discuss with carrier Be aware of the limitations and increase coverage as necessary (transit, off-site storage)

Why should the owner purchase the policy? Control over what property is covered Control of the perils insured Control of premium payment Control of loss reporting provisions/Direct contact with your own carrier Compliance with warranties The carriers who insured the Builders’ Risk may be the carrier for the completed building The Contract will specify who is responsible for the Builder’s Risk policy

Who is Insured? More complicated issue than ownership of a completed building Project owner is not always the sole owner of the property under construction until the general contractor is paid Contractors and subcontractors purchase materials and are reimbursed periodically during the constructions process Include owner, general contractor, and all subcontractors & Sub-Sub contractors as named insured

Underwriting Information Construction budget-allocation of hard and soft costs Hard Costs-cost of materials & labor Soft Costs- all other costs associated with the project other than hard costs. Construction schedule Type of project/details Name and background information on the general contractor

Coverages to Request All Risk Terrorism Earthquake and earth movement Flood Back-up of sewers and drains Underground Water Main Ordinance or Law (always included?) Hard Costs Soft Costs (additional interest on money borrowed, additional realty taxes, additional architect expense, additional insurance expense)

Coverages to Request (continued) Performance testing Off premises power Collapse – All Risk Temporary Storage Transit Debris Removal Mechanical breakdown Expediting expenses Emergency removal No Mold limitation if results from a covered peril

Coverages to Request (continued) Resulting property damage or loss caused by error, omission, or deficiency in design or specification Resulting property damage by use of faulty workmanship or product Privilege to complete and occupy Cost of excavation, underground pipes & conduits, footings and foundations Pollutant Clean-up Have we thought of everything? Existing structure-replacement cost

E&O Avoidance Clearly understand the project/exposures If you are not sure research in Silver Plume &/or ask colleagues Be sure you are in compliance with the contract and lenders conditions Be sure you clearly understand the coverages/exclusions-this is not a boiler plate policy Confirm warranties in writing to client If options are available clearly outline to the client Check-in with client for project updates