Builders Risk Reporting Form Showdown: Value at Risk vs. Total Completed Value

Builders Risk Tips With Director of Producer Training and Development

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3 min

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:

Hi there! 

Have you ever stopped and thought “Ugh, I wish I knew that then!”

You know… like when you discover the foil box has little lock tabs on the side to hold the roll in place. I can’t tell you how many times I’ve practically pulled the whole roll out, then the foil is all crinkly when I’m trying to roll it back up.

What about this one? Did you know these little holes? Well, if you put the laces in there, it keeps the shoe tight on your foot so you don't get blisters. Can't tell you how many Band-Aids I've gone through.

And did you know about this? Look at this pepper. If you turn this upside down and do this with the salt, it comes out so much faster. My husband absolutely loves this one. I couldn’t care less, but he's all excited about it. 

Here's a big one for contractors who build multiple starts a year. In the marketplace, there are two primary types of reporting form policies: value at risk and total completed value.

With a “value at risk” reporting form policy, premium is based on the current value of each property at risk.

The builder has to frequently report the value of the work done up to that time, and whatever the materials are on site. Premium is calculated on these reported values so the insured only pays for what's exposed at that time.

But, reporting must be precise, on either a monthly or quarterly basis. For a value at risk policy, insureds must continuously track and report the current progress and value of the project.

So, the potential cost savings from the initial buy-in might not be worth all the admin work or penalties for failing to report on time.

The other most common reporting form calculates premium for each project based on “total completed value.”

This is the version offered by the Builders Risk Plan insured by Zurich. 

When a new start begins, the builder reports the full anticipated completed value of the project. Premium is calculated on that value, even if the project is just starting.

These total completed value reporting form policies are available with either an annual or a monthly rate.

Clients with projects on an annual reporting form policy would report once. Unless the project value increases during the course of construction, then they would need to submit another report to adjust the construction and value.

Conversely, clients on the monthly rate reporting form will report everything in inventory on a monthly basis until the project is out of inventory.

The upfront premium can be higher for the total copmpleted value reporting form compared to the value at risk option. But, our reporting form policy provides certainty for coverages and limits from day one, regardless of the completion state.

This policy also comes with a lot less admin work for the builder.

Not sure how to calculate total completed value? I've got a video for that.

Remember, a reporting form policy isn't a perfect fit for every client, and even when it is, make sure they understand the guidelines. Both policies may have consequences if the reports are late or inaccurate.

If you want extra guidance, check out our Reporting Form Policy guidelines. 

Hope this helps. ‘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.