4 Builders Risk What-Ifs Every Agent Should Prepare For

Each month, US Assure Director of Producer Training and Development Mary Stiglic joins us in the studio to address a common question or pain point to help you confidently sell to and service your construction insurance clients.

Read the Video Transcript:

Do I really need this many batteries, what’s the worst that could happen?

[Thunder]

What do you mean these darn batteries don’t work?! I’ve got to find Kiwi’s cat treats! 

Hmmm … better to be prepared.

Hi there!

Emergencies don’t always come with a warning, so I’m checking over my disaster kit before the next storm hits. Trust me, you really don’t want to be around my cat, Kiwi, if I run out of treats.

Actually, that’s a lot like selling and servicing a Zurich Builders Risk policy. It pays to prepare your clients for those big “what if” moments, rather than face coverage gaps later on.

Let’s talk about four common scenarios you might come across and how you can help clients stay on solid ground when plans shift.

Number one: the project runs longer than expected.

On the application, make sure that you’re keying in the correct anticipated completion date and not the policy expiration date.

That way, if you ask for a new construction policy to be renewed or a remodeling project to be extended, underwriting is aware of this upfront.

Which leads me to the second situation … 

Number two: the total completed value increases.

This could be due to signed change orders, or some other reason. Our 40471 coverage form for projects valued under ten million dollars has a one-hundred percent coinsurance clause, which means the construction project needs to be insured to full value at all times.  

Encourage clients to call you as soon as changes happen. That way you can endorse the policy with new total completed value and update the anticipated completion date if it needs to be extended.

But if your clients are anything like me … well, I’m a little forgetful …  so it slips my mind and now I’m underinsured.

Good thing we have a change order endorsement that you can add to the policy. You can increase coverage by increments of ten, twenty or thirty percent. Think of it as a safety net just in case those updates aren’t reported before a claim occurs.

Let’s move on.

Number three: the HBIS inactivity clause.

If you’re covering a renovation project that includes existing structure coverage, you’re gonna want to hear this. The inactivity clause comes into play if construction doesn’t start within sixty days of policy inception or it stops for sixty consecutive days.

Theft, vandalism, glass breakage and water damage are excluded, AND there’s a fifteen percent penalty if a claim occurs during that time.  

So, talk with your client about their construction timeline. That way, you’re not putting a builders risk policy in place too soon. Or, when they finish with construction, they’re contacting you to put permanent coverage in place.

Last but not least, number four: mid-term change in policy ownership.

Zurich Builders Risk policies are not transferrable. If ownership changes, the policy must be canceled and rewritten. This happens more than you’d think and is another reason to check in with your clients. 

So, let’s recap: 

1. Use the correct anticipated completion date.
2. Keep the total completed value updated.
3. Pay close attention to inactivity periods.
4. Report ownership changes quickly. 

If you stay ahead of these four missteps, you’ll have stronger conversations and better protected clients. 

Now, I’ve got to finish stocking this kit … Kiwi is not surviving a storm without treats.

‘Til next time.

This is intended as a general description of certain types of insurance and services available to qualified customers. Any description of policy provisions is meant to give a broad overview of coverages and does not revise or amend a policy. Refer to the policy coverage form for a complete representation of the scope of coverage, terms, conditions, exclusions and more. The policy is the contract that specifically and fully describes your coverage. Some products may not be available in all states and may only be offered on a non-admitted basis. Product availability is subject to change.