Just as no two construction projects are identical, no two builders risk policies are always identical. When agents treat every project in the same manner or when insurance companies lack flexible underwriting solutions, clients’ needs can go unmet. In addition to subjecting clients to potentially uninsured or underinsured losses, agents may have to personally address consequences like unhappy clients and potential errors and omissions (E&O) claims.
Agents searching for a builders risk insurance partner should carefully evaluate whether the provider practices a flexible underwriting philosophy, with coverage and term options designed to address a variety of exposures rather than simply offering a one size fits all solution. If a provider only offers one policy without the option for specialized coverage or endorsements, their product is likely geared to a very specific type of construction project. If your client’s project doesn’t fit the mold, the insurer probably will not provide the coverage your client needs.
For example, a one size fits all builders risk policy may provide coverage for the hard costs of losses to the structure and materials used in construction, but may not allow customization for soft costs like advertising expense, construction loan interest, architect and engineer fees, real estate/property tax assessments, or license/permit fees, surveying or legal fees that could come into play if there is a covered loss that causes a delay in completion, or resulting insurance or marketing fees. Of course, underwriting flexibility is only half the battle; agents also need to have an understanding of the insurer’s policy and the scope of the client’s construction project in order to properly identify coverage needs for the project and educate clients about policy decisions, such as available optional endorsements.
For some agents, treating builders risk clients similarly by issuing cookie cutter coverage stems from a misunderstanding as to how these policies can be customized by project and related exposures. Agents should seek a builders risk insurance partner that offers multiple options for builders risk policies, understands that different construction projects have different potential risks, and offers coverage tailored to each project.
This is intended as a general description of certain types of insurance and services available to qualified customers. Your policy is the contract that specifically and fully describes your coverage. The description of the policy provisions gives a broad overview of coverages and does not revise or amend the policy.
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