6 Unusual Builders Risk Coverages Not to Pass On
Are you new to builders risk insurance and feeling overwhelmed by the volume of coverages that need to be considered? We get it. Coverage forms still make our eyes cross from time to time.
Or perhaps, you’re an experienced insurance agent who has fallen into a builders risk rut, offering the same options to all your clients?
Either way, it’s worth stepping back to consider the impact to your clients’ bottom line and your E&O.
We interviewed SVP, Head of Product Underwriting Rachele Holden to explore six commonly overlooked coverages and why you should give them (and yourself) a chance to shine should a disaster happen.
- Unsold Dwelling
What do you do when clients’ two years of coverage under the Builders Risk Plan are over, but they still need coverage? Also known as a third-year builders risk policy, our unsold dwelling coverage protects new home construction that’s either near completion, or complete and waiting for sale. This Zurich policy is also available for the second year. Bear in mind, the coverage form for the unsold dwelling policy differs from our standard builders risk policy. Compare them with your insured so you both know what to expect when the time comes to transition the policy.
- Ordinance or Law
This must-have coverage is automatically included for eligible residential and commercial new construction and renovation projects when the existing structure is excluded.
Let’s say you have a homeowner client who needs builders risk insurance for their new home construction. When the project is near completion, a storm blows a tree through the structure. By the time construction re-starts, building codes change the guidelines for a roofing system. With Ordinance or Law coverage, your client could be covered for the materials to bring that roof up to the new code. Without it, that client would be paying out of pocket for the added materials, and those costs really add up.
- Change Order
When the project value is established and a builders risk policy is secured, a client’s spontaneous change of mind to the building plans or materials can cost them should a claim occur. Modifications often increase the project value, but go unreported to their insurance provider, resulting in an underinsured project. However, with a Change Order endorsement, they can have coverage to protect the increased project value. This coverage can be added as a safety net in increments of 10, 20 or 30 percent of the total insured value at the time of issuance, or endorsed at a later date. Ideally, your client would call you to update their coverage limits with every project change. But in case that doesn’t happen, this endorsement can protect them.
- Testing of Building Systems
This endorsement provides residential and commercial clients with coverage for testing, start-up, commissioning, examination or trial of covered property to prove its ability to function with high-pressure vessels (also known as hot testing) presently excluded in the coverage form. Imagine, in the midst of construction, your contractor’s HVAC unit is installed incorrectly. During a storm, a power surge damages the unit. With Testing of Building Systems coverage, the contractor will be covered for the money to reinstall the new equipment and perform the necessary testing.
- Expediting Expense
You’ve heard the expression “time is money.” It doesn’t get any more literal than this coverage. When residential or commercial clients suffer a loss due to a covered cause, expediting expense coverage helps them get the project back to its pre-loss state … faster! With this coverage endorsement, your residential and commercial clients would receive the funding to expedite permanent repair or replacement of lost or damaged covered property.
- Rain, Snow, Ice or Sleet
Also known as water intrusion, this coverage extension is available for commercial new construction projects valued up to $75 million. If a structure isn’t fully enclosed, the Rain, Snow, Ice or Sleet endorsement ensures your client will be covered should their structure sustain damage from water intrusion.
Providing clients the information they need to make an informed decision is part of delivering value as their trusted insurance counselor. And sometimes, erring on the side of over-sharing coverages can spare them headaches (and spare you E&O claims) in the long run. It never hurts to pitch a coverage and give them the chance to decline it. Before you secure your next builders risk policy, give these course of construction coverages a look and decide … can clients afford to go without?
Want to study up on these coverages and more? Grab our free guide.
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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