Selling Builders Risk Insurance: 4 Obstacles You Can Overcome

As a trusted agent, you regularly address clients’ questions about the lines and types of insurance coverages you sell. More than likely, you’re also skilled at providing information that can help overcome clients’ initial hesitations or objections to purchasing insurance. But, what about those insurance products that don’t cross your path every day?

For those insurance professionals new to builders risk insurance or not selling it on a regular basis, you may be looking for guidance on how to address clients’ questions about why they need this critical coverage. Here are four common objections to purchasing builders risk insurance, and suggestions on how to successfully overcome these roadblocks.

1. “I have permanent property insurance. Doesn’t that protect me?”

   The short answer to this question is, “not necessarily.” Compare the forms. Encourage your clients to allow you the opportunity to compare their existing property policy against a builders risk coverage form, asking questions like:

   • How about if there is a theft of the building materials?
   • How much coverage is offered?
   • Does the property policy cover materials that are in transit to the covered location?
   • Does the coverage include debris removal?
   • Will it cover property at other locations?

     Clients should make these types of comparisons before simply assuming their property policy offers adequate protection.

2. “Doesn’t my builder carry builders risk insurance?”

   Sometimes builders carry the builders risk insurance, in which case the property owner may not need a separate policy of their own. However, putting the policy in the property owner’s name can prove beneficial, especially if there is a dispute between the two parties. If the two decide to part ways and the builders risk is in the builder’s name, the owner could be left without coverage. If the policy is in the property owner’s name, loss of coverage is less likely. Help your clients weigh the pros and cons of leaving coverage in their builders’ names versus purchasing the policy in their names.

3. “I’ll buy builders risk coverage after construction starts.”

   Builders risk coverage should always be considered and purchased before construction begins. In general, it can be difficult for a provider to cover a project that has already started. In a scenario where the builder thought the property owner was buying the coverage and the property owner thought the builder had it covered, agents can secure coverage after construction has started in certain circumstances with underwriting approval. While a provider may be willing to entertain an “oops” scenario, coverage should always be purchased before the start of the project.

4. “As a contractor, I only install _________. When do I need builders risk coverage?”
   
   If the installation work is done as part of a new construction project, then it may be covered by builders risk. However, there are cases in which a builders risk policy is either nonexistent or not the right match for a given project, for instance, while materials are in transit or in the case of installation work performed in an existing structure (like installing new cabinets in a kitchen). In that case, the contractor would need an installation floater. Help your clients understand when they may need separate policies.

When construction clients understand the depth and breadth of the US Assure Builders Risk Plan insured by Zurich, they will be able to make informed decisions about purchasing insurance coverage to meet their needs. Your expertise can help them understand the options and available coverages to ensure the best protection.

Learn how competitors stack up, and ensure your contractor and owner clients receive the most comprehensive insurance coverage for their construction exposures when you read our Builders Risk Insurance Checklist.

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.

Builders Risk Insurance Checklist

Your construction clients demand the most comprehensive coverage. Ensure your builders, contractor and owners have the best course of construction insurance coverage available.

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