Builders Risk Insurance—Archived Article

May, 2001

ISO Commercial Property Program

Summary: Coverage for insureds with construction exposures beyond the limited parameters of the building and personal property coverage form is accomplished through use of the simplified language builders risk forms and endorsements listed below. The policy may be used to cover the interest of the building owner; the contractor; or the interests of both, as their interests may appear.

The forms and form numbers are:

CP 00 20 10 00 builders risk coverage form

CP 11 05 06 95 builders risk reporting form

CP 11 06 11 85 builders risk adjustment form

CP 11 13 06 95 builders risk renovations

CP 11 14 07 88 builders risk—separate or sub-contractor's exclusion

CP 11 15 07 88 builders risk—separate or sub-contractor's coverage

CP 11 20 10 00 builders risk—collapse during construction

A complete builders risk contract is formed by combining the builders risk coverage form, CP 00 20, with a declarations page, common policy and commercial property conditions forms (see Common Policy Conditions and see Commercial Property Conditions), causes of loss form (see Causes of Loss), as well as any of the endorsements selected from the list above.

The one exception to the modular format of the commercial property program is the standard property policy CP 00 99 10 00. It is a self-contained unit that includes causes of loss and applicable conditions and is used for insuring risks for which the coverage under the other forms of the program is too broad. Endorsement CP 11 99 is used to modify the standard property policy for builders risk coverage.

General Eligibility and Rules

Builders risk coverage is written for a minimum one year term to cover a new building or structure under construction or an existing structure undergoing additions, alterations, or repairs. The rules in the commercial lines manual (CLM) state that policy inception should begin no later than the date that construction “starts above the level of the lowest basement floor” or, if there is no basement, the date construction begins. The rules permit pro rata cancellation when construction is completed, whether or not insurance on the completed structure is rewritten in the same company or companies. If the policy is cancelled before the structure is completed, the general cancellation provisions found in the common policy conditions apply.

The rules specifically provide that builders risk coverage can be written on exposures during construction that may not be eligible for certain coverages when occupied, the rationale being that buildings eligible for builders risk coverage are commonly unoccupied; therefore, eligibility criteria that depend on occupancy or use do not apply during the course of construction. Boarding or rooming houses (with a maximum of four units), dwellings, and farm properties are examples of such exposures.

Blanket insurance, covering more than one building or structure, is subject to the rating rules for such coverage. This is useful for housing projects and other large risks with several units being erected at the same time.

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