Builder’s risk policies are manuscript and complex, and many contractors don’t fully understand the nuances of how and where the coverages they need come from in the policy. Time and again we see contractors taking risk contractually that builder’s risk insurance could have supported, but the policies fall short for reasons identified in the checklist. Most contracts that mention builder’s risk at all talk only about insured status, duration, and possibly responsibility for the deductible. Construction contracts almost never address different available coverages and extensions, sublimits, or how a claim is made and paid. By getting language addressing the concepts in this checklist into the first draft of a prime contract, you create the opportunity for an educated conversation about important policy considerations. We know each placement is different and we know there are plenty of good reasons why everything on this list may not be available (or even reasonable) in a given situation. The point is to start the negotiation better informed. The point is not to “stick it” to the owners.

I. Contract Terms Specifying Builder’s Risk Policy Requirements

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II.  Builder’s Risk-Related Contract Terms

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III.  Additional Contract Term Considerations

  • Depending on the risks, the following potential coverages should be considered:
    • Land/landscaping/improvements – “horizontal work”
    • Property in transit
    • Pollution clean-up (including mold)
    • Hot testing/start up
    • Nuclear risk
  • Will the project involve a crane, boilers, turbines or other high value/risk equipment which is not normally covered by BR?
    • Crane/equipment floaters/policies are also variable – they may or may not cover damage to property caused by the equipment and/or consequential loss resulting from loss of the equipment
  • Will the project involve operations on or involving existing owner property/assets?
    • Can/should the BR extend to existing property?
    • Is a subrogation waiver from existing owner insurance appropriate?
    • What is the risk transfer plan for damages resulting from loss of use of the owner’s existing/adjacent property?
  • Does the project involve modular or similar off-project fabrication risk, significant/unusually high product risk, etc. which is likely not covered by traditional BR? What is the risk transfer plan for such property?
  • Does the project involve off-site storage, laydown, or similar sites where property to be installed will be stored?
    • Can these be added to the BR or is an alternative plan needed?