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March 16, 2010
By Ed Chapin, Vice President
A construction contract will almost certainly specify who will supply the Builder’s Risk Insurance coverage for any construction project. This could be the projects owner, general contractor or sub-contractor.
If the Owner is providing the Builder’s Risk policy, a contractor should use the “Owner Provided Builder’s Risk Insurance Coverage Checklist for Contract Negotiations“. The checklist provides an overview of what to look for when negotiating the terms of the Owner’s coverage.
Contractors should also use the Builder’s Risk Binder request form to obtain confirmation of the Owner’s coverage placement. Contractors should also obtain a complete copy of the Owner’s policy, unless the Owner is utilizing its existing property insurance policy to provide the coverage. If this is the case, a certificate of insurance should be requested. If the Owner’s broker/agent cannot supply the policy copy before work begins, ask for a Binder or Confirmation of Coverage placement. Regardless of who supplies the Builder’s Risk policy, it should conform to the terms of the construction contract, and to the following standards:
There really is no standard Builder’s Risk policy. The policy provisions vary substantially from insurer to insurer. Similarly, there is no standard construction project, and the loss exposures differ considerably from one project to another. Therefore, purchasing insurance for the exposures presented by a construction project should involve careful identification and analysis of loss exposures, and efforts to tailor coverage to insure those exposures. Failure to exercise care in the process may result in substantial uninsured exposures to loss. For all projects, it is imperative that a contractor take the time to ensure that they are covered for any loss that may occur. As the recession deepens and contractors look for ways to improve their bid costs, it has become all too common for contractors to start or even complete projects without the right coverage, or cancel coverage before a project is complete.
Parker, Smith & Feek is proud to offer our clients a dedicated resource for Builder’s Risk. In 20 years, we have placed more than $3 billion in builder’s risk values, while providing our clients the best options to meet their exposures.
The views and opinions expressed within are those of the author(s) and do not necessarily reflect the official policy or position of Parker, Smith & Feek. While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it.