Builders Risk Coverage – Part 1

Builders Risk Coverage insures against direct physical loss or damage caused by certain sources of loss that occurs to buildings and structures that are under construction. It can also be used to cover renovations, remodeling, and improvements in existing buildings. There are two coverage approaches for construction and renovation risks, used of a standard, Builders Risk Policy or to choose among a variety of Inland Marine coverage forms. The latter consist of forms that do not require filing with state insurance departments, so are called non-filed forms.

Advantages of Using Builders Risk Coverage

  • As a filed coverage form, it is subject to rate filings and cancellation laws that favor and protect the policyholder
  • It is a standardized form. This makes it easier to compare it directly to individual insurance company builders risk coverage forms
  • It can easily be added to a commercial package policy to provide more comprehensive protection
  • Rates are filed and are easier to understand than primarily judgment rates used with inland marine coverage forms
  • Builders Risk basic coverage is easily modified by a variety of available optional coverages (endorsements)

Advantages Of Commercial Inland Marine Builders Risk Coverage Forms

The various inland marine builders risk coverage forms also have certain advantages:

  • They are usually more flexible and are subject to more underwriting judgment
  • They have more reporting features and options, making them easier to use by contractors engaged in multiple construction projects
  • Different pricing approaches may be used to help a building contractor's cash flow
  • These coverage forms may provide greater coverage flexibility

Please see part 2 of this discussion.

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