Anticipated Completion Date: Why It Deserves a Second Look

Each month, US Assure Director of Product Underwriting Gina Newmans joins us in the studio to address why certain underwriting questions are asked, where common mistakes occur in the policy issuance platform, and offer guidance to help agents submit applications correctly.

Read the Video Transcript:

Today we're discussing one of the most important, yet often overlooked, details on our builders risk application: the anticipated completion date.

It may seem like just another date on the application. But if it’s incorrect, it can significantly affect your client when a claim occurs. In some cases, coverage may be reduced or may not apply as expected.

Think of it like booking a flight for the wrong day. The mistake is easy to overlook at first, but it matters when it’s time to travel.

Why Underwriting Asks for Anticipated Completion Date

The anticipated completion date helps Underwriting understand the project’s timeline and exposure, specifically when time-element coverages like Soft Cost or Business Income are included.

That's why the date should be confirmed from the construction contract or project schedule, or with the owner or general contractor. The wrong date could potentially create long-term financial consequences in the event of a claim.

One of the most common mistakes we see is using the policy expiration date instead of the project's actual anticipated completion date.

It’s understandable. Sometimes you don't have the date readily available and defaulting to the policy expiration date is used to keep the application process moving. After all, the expiration date may be the last day coverage is needed, so it seems logical.

The date also matters when considering renewals and extensions.

Construction projects don't always go according to plan, So, if the anticipated completion date shifts, the policy should be endorsed to reflect the revised date. 

Remember: the time element coverages are designed to put the insured in the position they would have been in had the covered loss never happened.

How It's Used

During a claim, the anticipated completion date helps determine whether a covered loss actually delayed the project.

Let's look at an example.

A new warehouse construction project is scheduled to be completed on December 31st, and that date is correctly entered on the application. The agent also secures soft cost and business income coverage for the builders risk policy.

In October, a storm damages the roof and causes water damage, delaying completion by three months.

In this situation, the client’s soft cost and business income coverages could apply, subject to the policy terms and conditions, because the covered loss was the direct cause for the project to finish later than originally anticipated. 

These time element coverages are intended to address financial losses that result from a delay beyond the anticipated completion date, subject to any applicable waiting period or deductible.

Now let's look at the same scenario with one important change.

The warehouse is still expected to be completed on December 31st. However, this time, the anticipated completion date is entered as April 25th – the policy expiration date.

The same October storm delays project completion by three months, moving it from December to March.

If the correct anticipated completion date of December 31st was listed, the Soft Cost or Business Income coverages could apply, subject to the policy terms and conditions.

But because the application lists the policy expiration date of April 25th, the timeline does not reflect a delay in completion. Even if the physical loss is covered, the time element coverages may not trigger as expected.

That's why it's so important to use the project's actual anticipated completion date rather than defaulting to the policy expiration date.

Getting Anticipated Completion Date Right the First Time

Before submitting a builders risk application, consider following these steps:

1. Confirm the anticipated completion date using the construction contract or project schedule. Keep in mind, it may or may not match the policy expiration date.
2. Include a copy of the construction schedule with the application.
3. Encourage the policyholder to update the schedule when project timelines change, and educate them on the consequences if not followed.
4. Update the anticipated completion date whenever the project timeline changes.
5. Confirm this date during renewals, extensions and endorsements.

After a loss, contractors are focused on getting the project back on track. Having the construction schedule already on file can save time and help support the claims process.

Let’s wrap up.

The anticipated completion date may seem like a small detail, but its impact can be significant in the event of a claim.

So, remember: Ask the question. Verify the date. Keep it updated throughout the policy term.

That's a win for everyone involved.

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The description of the Builders Risk Plan insured by Zurich is only a summary of available coverages. The terms, conditions, provisions, limitations, and exclusions of the actual policy as issued will dictate the scope of coverage in the event of a claim.