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

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.

Or, how about this? See those holes way up there on my shoes? Those keep the shoe tight to my foot … so I won’t get blisters! That would’ve saved me a lot of band-aids.

And there’s a big one for contractors who build multiple starts a year. Across the industry, 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 work in place and materials onsite for all projects. Premium is calculated on these reported values. 

So, the insured only pays for what is exposed at that time. This version of a reporting form policy can work well for a contractor with lots of short-term projects or variable schedules.

But the reporting must be precise, on either a monthly or quarterly basis. Insureds consistently track and report the correct project value for that point in time of construction. So, the intial cost savings may not be worth the admin work or penalty for errors. 

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 that project. Premium is then calculated on that value, even if the project is just starting.

Typically, projects are reported once, unless the project value increases during the course of construction.

This version of a reporting form policy can work well for contractors with multiple projects that have established schedules, all requiring more than a few months to complete. The upfront premium can be higher compared to the “value at risk” option.

But, our reporting form policy provides certainty for coverages and limits from day one, regardless of its stage of completion. This policy also comes with a lot less admin work for builders. 

Not sure how to calculate total completed value? I have a video about it! Look for the link at the end of this video.

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 reports are late or inaccurate. And if you want extra guidance, check out our Reporting Form policy guidelines for agents linked at the end of this video. 

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.