Topics covered:
Builders risk reporting form
Builders risk renovations
Separate or subcontractors exclusion
Separate or subcontractors coverage
Collapse during construction

Builders Risk Reporting Form

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

BUILDERS RISK REPORTING FORM

This endorsement modifies insurance provided under the following:

BUILDERS' RISK COVERAGE FORM

BUILDERS' RISK CHANGES – STANDARD PROPERTY POLICY

SCHEDULE*

Prem.      Bldg.      Actual Cash Value

No.          No         On Inception Date

A.     When this endorsement is attached to the BUILDERS' RISK CHANGES – STANDARD PROPERTY POLICY CP 11 99 the term Coverage Part in this endorsement is replaced by the term Policy.

B.     You must:

1.     Within thirty days of the inception of the Coverage Part, select a day of the month on which reports of value will be effective.

2.     Within thirty days of the effective date of the report of value, file with us a report each month of the actual cash value of the Covered Property.

C.     If, at the time of loss:

1.     You have failed to file with us reports of value as required, we will not pay more than the value stated in the last report filed before the loss.

2.     You have not filed any reports, we will not pay more than the actual cash value as of the inception date of this Coverage Part.

D.     Full Reporting.  The NEED FOR ADEQUATE INSURANCE Additional Condition is replaced by the following:

     We will not pay more for any loss than the proportion the values last reported before the loss bears to the actual cash value of the Covered Property on the effective date of the report.

E.     We will not pay more than our Limit of Insurance even if the values reported exceed that limit.

F.     Premium Adjustment

1.     The initial premium for this insurance is based on the actual cash value of the Covered Property on the inception date of this Coverage Part.

2.     For each report based on the change in values as shown in your report, we will:

a.     Charge additional premium; or

b.     Credit return premium.

3.     The charge or credit will be for the period from the midpoint between the effective dates of the current and last previous report due to the expiration date of this Coverage Part.

* Information required to complete this Schedule, if not shown on this endorsement, will be shown in the Declarations.

Analysis

The builders risk reporting form, CP 11 05, may be attached to CP 00 20 and CP 11 99. The actual cash value of insurable property at the time it is brought on the premises is used to determine the initial premium. Note that this amount reflects the value at the beginning of the policy period—not the completed value of the building as on CP 00 20. This allows the insured to tie premium payments more closely to the values that are actually at risk.

The provisions of the builders risk reporting form require an insured to report the value of the property covered on a monthly basis. The insured must select a day of the month on which reports of value are effective; the selection made within thirty days of policy inception. Once a day is chosen, reports are due each month within thirty days of that day. (This could, in effect, give the insured sixty days to file the initial report.) Reports of value are submitted on form CP 11 06, builders risk premium adjustment form.

The policy is then endorsed to show the increase in value indicated by the report—the difference between the actual cash value at the current date and what it was a month before. An additional premium is charged for the reported increase for the unexpired term of the policy and is computed from the date midway between the dates of the current and preceding report.

The insured must report the full increase in value each month. A full reporting clause, the equivalent of a 100 percent coinsurance clause, limits the proportion of any loss that the last reported value before the loss bears to the actual cash value on the date for which the report was made. A penalty occurs if the insured fails to submit reports as required, since payment becomes no more than the actual cash value stated in the last report filed before the loss. A severe penalty is imposed if the insured has not filed any reports; in that case, the insurer pays no more than the actual cash value as of the endorsement's inception date.

The commercial lines manual (CLM) rules state that the minimum one year policy term of the builders risk policy may not be extended by endorsement when the reporting form is used.