Some contractors and their insurance agents are under the impression that one builders risk insurance policy is the same as any other. But in reality, while builders risk products offered by different carriers may share some similarities, there are many important factors that separate each. For an agent or client who shopped for coverage based on how much builders risk insurance costs alone, assuming that all policies are alike can be an expensive mistake when a loss occurs.
Builders risk insurance policies may offer broad form coverage, or they may be "specified peril" (or "named peril") policies. Clients looking for the cheapest possible premium might be drawn to a “specified peril” policy; however, if a loss occurs and it wasn't directly specified in the policy, the client may be shocked to learn their project wasn't covered. One example of this would be a policy specifying that it covers damage from lightning strikes to the covered property. If lightning strikes a nearby building causing a fire that damages your client's construction project, this type of specified risk policy wouldn't cover the losses because lightning didn't strike the construction project itself.
Most broad form policies will cover damage caused by theft, vandalism, aircraft damage, fire, hail damage, explosions and damage caused by heavy winds (if not excluded). Of course, every policy also includes certain limitations and exclusions from coverage. These exclusions vary from carrier to carrier. Some common exclusions across policies and carriers are damages caused by intentional acts by your client or their employees, governmental actions, and damage caused by war.
Other common exclusions may include damage caused by flood waters and earthquake damage. While the US Assure Builders Risk Plan insured by Zurich offers clients the option to cover these and other types of losses by adding optional endorsements to their policies; not all products offer that option.
It's also important to understand what qualifies as "covered property" when shopping for builders risk insurance. One notable difference is that the US Assure Builders Risk Plan insured by Zurich covers construction materials in transit and materials stored at temporary storage locations; other carriers' products may include a much more limited definition of "covered property" for the policy.
Taking time to look under the hood with different builders risk carriers and their products can be an eye-opening experience, but it's a step every agent helping clients find builders risk coverage should take. Finding out that the policy doesn't cover damage after a loss occurs can lead to problems for both construction clients and their agents — you can avoid that by being proactive for your clients.
Learn more about the US Assure Builders Risk Plan insured by Zurich and how to help your clients choose builders risk coverage that will truly protect against losses and meet their needs, download our free resource, Builders Risk Insurance Checklist.
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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