Builder’s Risk Insurance: A Broker’s Blueprint to Protecting Construction Projects

Improve your knowledge of Builder’s Risk insurance with industry experts from Distinguished by watching our webinar recording. Discover how to calculate coverage, gain underwriter recommendations, distinguish Builder’s Risk from other policies, and explore coastal coverage options.

Learn sales tactics, find leads, and specialize in providing your clients with complete construction protection through Distinguished Programs. Don’t miss this opportunity to advance your expertise!

Get the Builder’s Risk Insurance session handouts here:

+ Transcript & FAQ

+ Video Recording 

+ Slides 

Below are additional attendee questions we could not address during the session.

What if the customer purchased the property already started, but it is new to them?
It would depend on the amount of work already underway. While technically not considered a “prior start,” we would treat it as one. The earlier in the work we get the risk, the better the chance for consideration.

Who is the paper for the Builder’s Risk insurance program?
Builders Risk Property is with Granite State Insurance, and the liability is with Lexington Insurance.

Can you entertain a mid-term project?
We can consider mid-term projects; we refer to them as Prior Starts. We prefer to come in at the earlier stages of the project and not “mid-way.” We look at these on a case-by-case basis.

Can you clarify that you said a maximum of 24 months of coverage – is that the max length of the extension or the entire policy period? Max policy term?
Builder’s Risk policy options are 3, 6, 9, and 12 months. We can do extensions for qualifying projects, and the maximum term is 24 months (includes initial policy term + extensions)

Has risk increased for Vacant Property policies?
No, our capacity for Vacant Building is $5M. However, on newer builds waiting sale or occupancy, we have offered limits up to $6.5M (non-frame.)

Has risk increased for Vacant Property policies?
No, our capacity for Vacant Building is $5M. However, on newer builds waiting sale or occupancy, we have offered limits up to $6.5M (non-frame.)

With risks like modular homes, is the coverage if the house has been shipped but not placed on the property? And to what limit?
If the modular home is completed before shipping, we require it to be attached to the ground/foundation before considering it.

How do we handle scenarios where the lender requires coverage for the total amount of the loan, but the loan includes the cost of the land?
It would depend on the valuation and the cost per square foot. If the required valuation is within range of our valuation through MSB and we have confirmed the bank/lender requires a specific limit, we have made exceptions.

Is there a restriction on extensions based on the amount of the project completed at the point of extension request?
Yes, we do underwrite extensions. We look at the following:

• Length of the initial term

• Betterments limit

• How much of the project is completed

How are the lenders listed? Additional Insured?
Yes, lenders are listed as Additional Insured.

Is New Jersey included in the 20 coastal states? For residential, can the owner be the GC?
Yes, NJ is one of our coastal states. And yes, the owner can be the GC.

Hi. I wonder if there are any plans to consider the builder’s risk existing building value at RC rather than ACV. I see both with carriers.
No, we would value the existing structure as AC.

Is there a limit to the length of time for a ground-up project?
Our Builders Risk maximum term, initial term + extensions = 24 months

Can you write EIFs Exterior Insulation and Finish System (EIFS) ?
We do not have an EIFs exclusion. EIFs exclusion refers to excluding Environmental Impact Funds (EIFs) from certain investments or financial products.

Is any occupancy allowed “during” the construction period or after?
Single Family Dwellings we require 100% vacancy. We’ve made exceptions when there is no work being done to the actual home and the work is for another property on the same site, such as an ADU. However, we would not offer CGL in that scenario. We can allow for 30% occupancy on multi-unit dwellings or commercial properties.

For tenant buildout new to the unit, what is recommended?
We would consider this betterment-only project, as the property owner would cover the existing property.

How do you look at remodeling projects without prior insurance that was stopped at some point due to lack of finances and want to continue now?
This would be ineligible.

What would be GC’s interest in the property if he /she does not own the property? Could he be named insured without insurable interest?
The Builders Risk Policy is to provide coverage for the property and the work. We would not add the GC as a named insured without insurable interest.

What is your vacant building limit?
$5M – all construction types

Do all quotes need to be submitted to underwriting?
100% of our applications come via our online portal, and approximately 65% are straight through (no underwriting review.) Only those accounts that trigger a referral would require underwriting review. Some triggers include but are not limited to:

• Prior Claims

• High TIV’s

• Increase risk due to wildfire score or wind/hail

• Prior start projects

About Distinguished Programs

Distinguished Programs is a leading national insurance Program Manager providing specialized insurance programs to brokers and agents with specific expertise in Fine Art and Collectibles, Environmental and Construction Professional, Executive Lines, Inland Marine, Real Estate & Builder’s Risk, Community Associations, Hotels, and Restaurants. Property and Liability products are distributed through a national network of agents and brokers. Serving the same core markets and partnering with the most stable and reputable carriers, Distinguished’s high-limit Umbrella programs remain the clear choice in its area of specialty for superior coverage, competitive pricing, and attentive service. Through thoughtful innovation, stemming back to 1995, Distinguished Programs fosters growth and opportunities for its brokers, carriers, and employees.

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