How 'delay in completion' coverage applies in builders risk

Coverage Q&A: Construction projects often face delays that require a special endorsement to ensure insurance coverage.

Builders risk insurance protects a person’s or organization’s insurable interest in materials, fixtures and/or equipment to be installed during the construction or renovation of a building or structure. (Photo: Shutterstock)

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Editor’s Note: This week’s question concerns coverages provided under a “delay in completion” endorsement added to a builders risk insurance policy.

Question: How does a “delay in completion” endorsement work on a builder’s risk policy?

— California Subscriber

Analysis: Construction projects can be large and complicated, and sometimes involve added costs outside the project itself. Sometimes these additional costs, called soft costs, can be expensive, and their requirements can be time-consuming and cause construction delays. Especially when considering if a loss occurs that affects the project cost and also causes delays in getting soft costs completed, such as an increase in interest expense on money borrowed to finance the project, then soft costs could cause a loss in business income as well.

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