“Wait, who’s supposed to do this part?” you wonder, reviewing the requirements of your contractor’s builders risk reporting form policy.
When it comes to the reporting form policy, decoding responsibilities between you and your client may seem a little hazy if you’re not familiar with the recommendations we make in 5 Steps for Reporting Form Accuracy.
To clarify this common scenario, let’s dive deep into the duties for each party.
- Choose the right contractor
Reporting form policies aren’t a great fit for every contractor. Eligible clients for this policy type are contractors with two or more residential / commercial new construction projects (valued up to $3 million) in a 12-month period. But beyond this basic eligibility guideline, you will need to use your best judgment to determine if your client’s operation is suited for this policy.
Reporting form builders risk policies require organization and very timely follow-through to ensure there are no lapses in coverage. So, if your client uses their truck dashboard as a filing cabinet, a blanket deposit premium or single-project policy may be more fitting. Navigate to the right policy by using our agent guide.
- Walk through the policy
Though reporting form policies can be very helpful for those with multiple starts in a year, they also take more work. Make sure your client knows what will be covered by their policy, the eligibility requirements and the underwriting guidelines to which they will need to adhere.
You should also discuss the difference between monthly and annual reporting forms, and determine what coverage approach is best for the client.
- Spell out the terminology
From provider to provider, not all construction insurance terms mean the same thing. Clear up any confusion with your client, especially when it comes to terms like “starts,” that could have a major impact on their coverage.
Properly reporting starts and / or inventory is a requirement for coverage to take effect. Review the definition of a start (and any other ambiguous terms) with your client by reading the builders risk policy together.
- Talk numbers
Premium calculation is often an area of some confusion, and it’s a crucial point to ensure coverage lapses don’t occur. To help clients avoid that, walk them through premium calculation. Start with the total estimated completed value for each structure and divide it by $100. Then, look for the premium rate on the report and multiply the numbers together to get the amount due. Remind them: the premium payment and report are due at the same time.
- Don’t forget: change happens
The change order endorsement is not available on a reporting form policy, so coach clients to submit notification of changes on their report by the end of the following month (and to check the back of the form for additional variable rate information).
- Review the policy and ask questions
As an insurance agent, it’s up to you to walk them through their builders risk coverage. But reviewing the policy, comprehending it and asking questions for clarification falls on the shoulders of your client.
- Get to know the reporting form
In addition to the information they provide on the front side of the reporting form, clients should review the back for more information about additional variable rates they may find useful (e.g. model home contents, third-year coverage, protection classes, etc.).
- Complete reports on time
Each report is due by the last day of the following month. So, if they started building a house in October, the report would be due by the last day of November.
In this report, clients should include any changes made to the original project (instead of the typical change order they’d submit through you), rate information for coverages from the back of the form (as needed), and ensure the premium payment is included.
While it can be tempting to offer to complete the reports and submit payments on behalf of your client, we don’t recommend it. Not only is the report meant to be completed and submitted by the contractor, but doing so can put you in a unfavorable situation should a report come in late or be inaccurate.
- Plan for delays
To reiterate: reports must be submitted on time. Contractors should take mail processing and its potential delays into account to ensure the report and premium payment arrive to the destination by the scheduled due date.
As an insurance professional, your responsibilities truly come down to education. Without it, your client risks coverage lapses, and you risk frustrated customers (who could potentially file E&O claims). And no matter what: make sure you get a completed application signed by your client, and keep it for your records. It’s a “just in case” that can really save you trouble down the line.
Looking for more insights to help you coach contractors through the reporting form process? Check out our free resource, 5 Steps for Reporting Form Accuracy.
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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