Builder's Risk Insurance

Builder's Risk

You've got a general liability policy but now the bank (or homeowner) wants to protect what your building. You call your agent and he thinks it's either property or a Builder's Risk policy. Panic? No......here's a "basic" answer.
Your construction project, whether a large or moderate undertaking, require that insurance coverage be selected with the utmost care. Generally, the builders risk (or course of construction) exposure may be insured under either a commercial property or an inland marine policy. [different types of insurance policies]
Forms and rates associated with commercial property builders risk coverage ordinarily are filed with state insurance regulators. Forms and rates of inland marine builders risk policies, however, are not subject to filing requirements and thus are referred to as "nonfiled" forms. Insurers have more flexibility in underwriting nonfiled classes because they can create their own coverage provisions and rates, which can be tailored to the particular risk exposure.
Picture a typical construction project-perhaps a school, an apartment building, or an office building-and consider the parties involved in the planning and execution of the project, the general layout of the site, the building materials and construction equipment needed to complete the project, and the work force required.
Builders risk insurance is designed to insure construction projects, and it covers buildings and other structures while being built, including building materials and equipment intended to become part of the building or structure. Coverage applies to property while at the job site, off site in storage, and in transit. (Coverage for construction equipment, i.e., forklifts, bulldozers, mobile tools, and so on, would be provided by contractors equipment insurance.)
Typical parties to a construction contract could include:
* Project owner - party that owns building or is having building constructed
* Architect/engineers
* General contractor/contractors/ subcontractors
* Lenders
* The construction contract itself, while not a party, is a crucial element of a construction project

There you go.....

Warranty Language

Most applications for General Contractors have an area where the GC initials that they get certificates of insurance from all their subcontractors. I have 3 contractors in the office today and explained this requirement. As usual everyone agrees that it will be done but sometimes in the rush of life the GC forgets. Recently a Breach of Contrator's Warranty case was litigated in the California Court of Appeal. Mr. Barry Zalma writes on the insurance industry claims pratice team for IRMI. As a Construction Risk Insurance Specialist I receive weekly updates and this article by Mr. Zalma (www.zalma.com) hit home.
---------LINK http://www.irmi.com/expert/articles/2009/zalma10-insurance-claims-practices.aspx

Breach of Contractor's Warranty Defeats Coverage
October 2009
Insurers who insure the liability of contractors will often include in their policy a warranty that compels the general contractor to obtain proof that all its subcontractors are insured. In an important case, North American Capacity Ins. Co. v. Claremont Liab. Ins.Co., 99 Cal. Rptr. 3d 225, 177 Cal. App. 4th 272 (Cal. App. Dist. 2, Aug. 4, 2009), dealing with a clause rarely litigated, the California Court of Appeal enforced such an agreement and issued a warning to all general contractors who do not comply with similar warranties that they may be eliminating their own coverage.
by Barry Zalma

So don't forget to collect certificates and get contracts in place with your sub contractors.