AAIS BUILDERS' RISK COVERAGE FORMS ANALYSIS

The American Association of Insurance Services (AAIS) Builders' Risk Coverage Forms insure buildings or structures during construction, renovation, rehabilitation, or repair. The named insured may be the building owner, the builder/contractor, or the party whose building is being constructed, renovated, rehabilitated, or repaired. Coverage may apply to either a single construction project or multiple jobsites.

Non-reporting builders' risk coverage is written for the full, completed value of the project, but losses are paid based on the actual construction value completed when the loss occurs. Several reporting techniques or methods are available when builders' risk coverage is written on a reporting basis. Comparing coverage forms should include comparing the reporting method used and the premium payment arrangements available.

AAIS has developed six builders' risk coverage forms. Each has its own corresponding schedule of coverages. This analysis examines each of these coverage forms. Many endorsements are available to tailor coverage to fit the unique needs of different types of construction projects.

ELIGIBILITY

Any builder or contractor, owner, or purchaser with a financial interest in the building or structure under construction, renovation, or repair is eligible for coverage using the scheduled locations or jobsite forms.

The only exception is that IM 7057–Builders' Risk Coverage–Contractors' Reporting Form and IM 7058–Builders' Risk Coverage–Builders' Risk and Installation Floater Form are restricted to only builders and contractors.

POLICY CONSTRUCTION

AAIS Builders' Risk coverage requires at least these four forms:

CL 0100–Common Policy Conditions. This form contains five basic conditions for all AAIS commercial lines coverage forms and policies.

IM 7900–Inland Marine Declarations
The appropriate builders' risk coverage form
The corresponding schedule of coverages

SCHEDULES OF COVERAGES

IM 7055–Schedule of Coverages–Builders' Risk–Comprehensive Form is used with IM 7050–Builders' Risk Coverage–Scheduled Jobsite Form–Comprehensive Form.
IM 7056–Schedule of Coverages–Builders' Risk is used with IM 7051–Builders' Risk Coverage–Scheduled Jobsite Form.
IM 7057–Schedule of Coverages–Builders' Risk–Contractors' Reporting Form is used with IM 7052–Builders' Risk Coverage–Contractors' Reporting Form.
IM 7058–Schedule of Coverages–Builders' Risk and Installation Floater is used with IM 7053–Builders' Risk Coverage–Builders' Risk and Installation Floater Form.
IM 7059–Schedule of Coverages–Builders' Risk–Rehabilitation and Renovation is used with IM 7054–Builders' Risk Coverage–Rehabilitation and Renovation Form.
IM 7981–Schedule of Coverages–Builders’ Risk–Civil Works Project is used with IM 7980–Builders’ Risk–Civil Works Project Form (09 15 addition)

IM 7055–SCHEDULE OF COVERAGES–BUILDERS' RISK COMPREHENSIVE FORM (01 12 changes)

This Schedule of Coverages is used with IM 7050–Builders' Risk Coverage–Scheduled Jobsite Form–Comprehensive Form. IM 7055 contains the following information:

Policy Number (01 12 addition)

The 01 12 edition added a space to enter the policy number.

Scheduled Jobsites

All covered jobsites must be listed. Coverage does not apply to any jobsite that is not listed. IM 7087–Additional Builders' Risk Schedule is used to list jobsites that cannot fit on IM 7055 because of space considerations. Each listed jobsite must include a limit.

Catastrophe Limit

This is the most paid in a single occurrence or loss, regardless of the number of buildings, structures, or jobsites.

Coverage Extensions

The limits on the Schedule of Coverages for the following coverages apply to all covered locations:

Additional Debris Removal Expenses

The limit is $5,000 unless a different limit is entered.

Emergency Removal

This applies for ten days unless a different number of days is entered.

Emergency Removal Expenses

The limit is $10,000 unless a different limit is entered.

Fraud and Deceit

The limit is $50,000 unless a different limit is entered.

Limited Fungus Coverage

The limit is $15,000 during each 12-month period unless a different limit is entered.

Waterborne Property

The limit is $10,000 unless a different limit is entered.

Supplemental Coverages

Each of these coverages provides additional limits of coverage or additional coverage. Required entries vary by type of coverage.

Expediting Expenses

The limit is $10,000 unless a different limit is entered.

Expense to Re-Erect Scaffolding

The limit is $5,000 unless a different limit is entered.

Fire Department Service Charges

The limit is $1,000 unless a different limit is entered.

Ordinance or Law (Undamaged Parts of a Building)

The word “Covered” is entered with no other entry available.

Ordinance or Law (Increased Cost to Repair and Cost to Demolish/Clear Site)

The limit is $50,000 unless a different limit is entered.

Personal Property

The limit is $10,000 unless a different limit is entered.

Pollutant Cleanup and Removal

The limit is $25,000 during each 12-month period unless a different limit is entered.

Rewards

The limit is $1,000 unless a different limit is entered.

Sewer Backup

The limit is $10,000 unless a different limit is entered.

Temporary Storage Locations

The limit is $10,000 unless a different limit is entered.

Transit

The limit is $10,000 unless a different limit is entered.

Trees, Shrubs, and Plants

The limit is $10,000 unless a different limit is entered.

Deductible

One deductible is entered that applies per occurrence.

Coinsurance

One of the following boxes must be checked:

100%
Coinsurance Provisions Are Waived

Permission to Occupy

One of the following boxes must be checked:

Permission to occupy is not granted
Additional Coverage Limitations 1. Occupancy and Use are deleted.

When this box is selected, a month, date, and year must also be entered. The named insured is thereby given permission to occupy the covered property after the date entered into the spaces provided and continue to be covered.

Additional Information (01 12 change)

This section of the schedule of coverages lists endorsements and forms included when the policy is issued.

The previous edition referred to this section as Optional Coverages and Endorsements.

IM 7050–BUILDERS' RISK COVERAGE–SCHEDULED JOBSITE FORM–COMPREHENSIVE FORM ANALYSIS

This analysis is of the 08 12 edition. Changes from the previous edition are in bold print.

Introduction

This section states that the terms you and your refer to the named insured. The terms we, us, and our refer to the insurance company that provides the coverage. In addition, Definitions are now at the end of the coverage form.

Agreement

This section states that the insurance company provides the coverage described in the policy in return for the named insured paying the premium. This is subject to all the policy’s terms, conditions, endorsements, and definitions.

Property Covered

1. Coverage

Coverage applies to direct physical loss or damage to buildings or structures while they are in the course of construction, erection, or fabrication. The loss or damage must be caused by a covered peril.

2. Scaffolding, Fencing, and Temporary Structures

Direct physical loss or damage to scaffolding, construction forms, temporary fencing, and temporary structures is covered but only when the loss or damage is caused by a covered peril.

Example: Carol acts as her own general contractor for her new home and purchases builders' risk coverage for the designated project. The building materials are delivered to the jobsite and are kept in a temporary storage shed on the jobsite, awaiting the construction crew's arrival. A sudden windstorm destroys the shed and $35,000 worth of materials. Coverage applies because the materials were intended to become part of the dwelling.

3. Coverage Limitation

Coverage applies to buildings or structures in the course of construction and the scaffolding, construction forms, temporary fencing, and temporary structures being used with those buildings or structures but only at jobsites listed on the schedule of coverages.

4. We Do Not Pay

a. Penalties

The insurance company does not pay penalties imposed because of either of the following:

A building or structure that is completed late or not completed at all. The insurance company does not pay the penalty even when the penalty is imposed based on the construction contract.
Conditions or provisions in the construction contract that were not met

Example: Carol's construction project affects the neighborhood's appearance and traffic patterns in the nearby area. As a condition of gaining approval for the project from her HOA, she agrees to clean up the jobsite daily and place debris to be disposed of where people passing by cannot see them. Failing to do so results in a daily fine of $100. Carol fails to clean up the site on seven different occasions and is fined for each one of them. She submits these penalties to the insurance company, but all are denied.

b. Diminution of Value (08 12 addition)

In some circumstances, a building that is repaired or replaced because of a loss is considered to have less value than one that has not sustained a loss. There is no coverage for this perceived loss of or diminution in value, regardless of how such value is measured.

Example: Carol’s home is almost complete when a freak snowstorm causes the roof to collapse. The insurance company pays to repair the building, and construction is finished. Carol decides not to move into the home but instead places it on the market. She is shocked to discover that its value is less than neighboring houses because realtors have found pictures of when it collapsed. She turns in a claim to her insurance company for the difference in the value of her home compared to surrounding homes. The insurance company denies her claim.

Property Not Covered

The following seven specific types of property are not covered:

1. Contraband

Property that is illegal to possess is not covered. Property that is legal to possess but being used as part of an illegal trade or being transported illegally is also not covered.

2. Land

Land is not covered. This is absolute and includes even the land where the covered construction jobsite is located.

3. Not a Permanent Part of Building

Coverage does not apply to business personal property, machinery, materials, tools, equipment, and supplies that are not intended to become a permanent part of a covered building or structure. The only exception is the coverage that Supplemental Coverages 6. Personal Property provides.

Example: Gus is having a new building constructed to house his coin-operated laundry and dry cleaning business. He decides to store some of his older cleaning equipment that he intends to sell in one section of the building under construction until he can sell it. Straight-line winds cause an improperly braced bearing wall to collapse, fall on, and destroy the equipment. The loss to the equipment is not covered because of this provision.

4. Roadways and Walkways (08 12 change)

There is no coverage for any part of walkways, roadways, and other paved surfaces over 1,000 feet from a covered building or structure. The 08 12 edition removed the words “not next to nor part of” in the previous edition.

Example: Gus is constructing a building at the far end of the jobsite. He built an access road to the site from the highway, but recent rains washed it away. The crew uses the driveway that services the completed buildings at the front of the jobsite as a temporary measure. A concrete truck causes that driveway to give way because the land under it is also inundated. The damage to the driveway is excluded because it is over 1,000 feet from the building under construction.

5. Standing Building or Structure

There is no coverage for a standing building or structure that was completely or partially constructed, erected, or fabricated before this policy’s effective date. Coverage also does not apply to any parts of such buildings.

Although not said in the wording, the parts of a standing building constructed or erected after the effective date would be covered. Similarly, the actual building or structure being rehabilitated or renovated is not covered, but the changes being made to it, such as alternations, improvements, and repairs, would be.

Example: Jerald purchases a building built in 1910 at a sheriff’s sale. He plans to renovate it and sell it at a considerable profit. If a loss occurs, the building is not covered. However, all of Jerald's repairs and the improvements he installs are covered.

6. Trees, Shrubs, or Plants

The insurance company does not pay for loss or damage to trees, shrubs, plants, or lawns. The only exception is the coverage that Supplemental Coverages - 12. Trees, Shrubs, and Plants - provide.

Example: Gus purchased many decorative and ornamental trees and shrubs at a deeply discounted price at the end of the season. He planted them around the building after the walls and roof were in place, figuring they would be safe. In addition to the damage to the driveway in the example above, the concrete truck failed to observe the plantings as it backed up and over several of the plants. The loss was excluded under this coverage and the Supplemental Coverage because a covered peril did not cause the damage.

7. Waterborne Property

Property that is waterborne is not covered.

There are two exceptions:

Coverage provided under Coverage Extensions 6. Waterborne Property
Property while in the course of transit by a carrier for hire.

The 08 12 edition deleted the following property not covered that were in the previous edition:

Aircraft or Watercraft
Money and Securities
Vehicles

Coverage Extensions

Provisions That Apply To Coverage Extensions

There are six coverage extensions. The limit for each is either the limit on the schedule of coverages or the default limit included in the specific coverage item. These coverages are part of the limit that applies to covered property and not in addition to it unless otherwise indicated. These limits are not added to or combined with limits for any other coverage extension or supplemental coverage and are not subject to any coinsurance provisions that apply elsewhere in the coverage form.

1. Debris Removal

When a covered peril damages or destroys covered property, the cost to remove any created debris is covered under this extension. Debris removal does not include any costs for removing, restoring, replacing polluted land or water to extract pollutants.

There are two parts to the Limit section. The first is restricting any debris removal payment to no more than 25% of the amount paid for the actual direct physical loss or damage. To calculate the 25%, only the direct physical damage loss is considered. The second part is that when the debris removal and the physical damage loss are added together, no more than the limit of insurance is paid.

An additional $5,000 (or a higher amount entered on the schedule of coverages) is available if the debris removal expense is more than 25% of the loss amount or if the combined cost of loss and debris removal is more than the limit of insurance for the covered property.

Debris removal expenses must be reported to the insurance company within 180 days of the date of loss for this extension to apply.

2. Emergency Removal

This covers direct physical loss to covered property removed from the scheduled location to avoid loss or damage from an impending covered peril. The loss can occur while in transit between the scheduled location and the sanctuary location.

This coverage is unique since the property that is being moved is not subject to any exclusion while in transit or at a sanctuary location. However, the reason for moving the property must be due to a covered peril.

Coverage applies for up to ten days after the property is first moved but does not extend past the policy’s expiration date. An entry can be made on the schedule of coverages to increase the number of days.

Note: Coverage does not extend past the expiration date, which means that if the insured has property at a sanctuary location when coverage renews, the sanctuary location must be listed as a premises, or coverage no longer applies.

Example: Cutting Corners Contractors' owner, Josh, knows that tomorrow's predicted tornado activity might wreak havoc on the incomplete apartment building under construction and the building materials and supplies scattered around the jobsite. Josh packs up as much of the materials as he can fit on a 26-foot box truck and drives it to a fellow contractor's warehouse where they unload the items. The rain from the storm caused a nearby creek to overflow its banks and enter the warehouse, destroying all the cargo. Even though flood is not a covered peril under this coverage form, this loss is covered because the destroyed items were initially moved to protect them from the covered peril of wind.

3. Emergency Removal Expenses

Moving threatened property can be expensive, so this extension pays the expenses the named insured incurs to do so. The reason for the move must be due to an impending covered peril. Expenses are paid for no more than ten days but include any storage fees incurred to keep the property at the safe location. The most paid for such expenses in any one occurrence is $10,000. This limit can be increased.

As with the Emergency Removal Coverage, the extension does not extend past the policy expiration date, even if the property is still at the sanctuary location.

This is additional coverage. As a result, all such expenses paid are in addition to the property’s limit of insurance.

4. Fraud and Deceit

When covered property is willingly given to another person, even by trick or device, coverage is excluded. This extension provides a limited amount of coverage for such a situation. When the named insured, its agents, consignees, or customers allow covered property to be stolen in any of the following circumstances, and it is stolen, a limited amount of coverage is provided:

Persons falsely represent themselves as the proper persons to receive the property.
Fraudulent bills of lading or other shipping receipts are presented.
Electronic data processing hardware or software fraudulently induces the property to be given away.

The most paid in a single occurrence is $50,000, but the limit can be increased.

Note: This is a sub-limit. If the property limit at the location is less than $50,000, the property limit caps the amount available. While the limit can be increased, it is still a sub-limit to the property limit.

Example: Ron is notified via email the cabinets he just received are faulty and should be returned immediately. He dutifully sends the cabinets to the “Return Center” referred to in the notice and waits for the replacement cabinets. Ron contacts the cabinetmaker ten days later and learns that the cabinetmaker did not send the notification. By then, the cabinets are long gone, and Ron sadly realizes he has been tricked. This coverage extension covers the loss.

5. Limited Fungus Coverage

Note: This coverage extension provides a small amount of coverage as an exception to the Fungus exclusion.

a. Direct damage or loss to covered property is paid when caused by fungus activity. The costs and expenses that arise when fungus is found on covered property because of a covered peril are covered.

b. Payment is only made if reasonable steps were taken to prevent the fungus at the time of the loss. The fungus itself must be the result of a specified peril. If flood is a covered peril, the fungus can be caused by flood. There is no coverage for fire- or lightning-related fungi.

c. A 12-month aggregate applies to this coverage. No more than $15,000 is paid during each 12-month period. This applies to all buildings, structures, claims, and locations. The limit can be increased.

d. If a policy is extended beyond 12 months, this aggregate time period extends to that same time period. No additional coverage limit is applied during the extended policy period.

e. A reoccurrence of a fungus event is considered a continuation of the initial fungus occurrence. It does not provide any additional coverage and is subject to the aggregate in place at the time of the initial event.

f. Cleanup, removal, testing activities, and costs related to a fungus incident are covered but subject to the same aggregate limit.

g. This coverage does not limit coverage for otherwise covered loss or damage that fungus does not cause. When fungus damage increases an otherwise covered loss, any such increase because of that fungus is subject to this coverage extension’s limitations.

Example: Jake has coverage at three jobsites. A hailstorm occurs, damaging covered property at all jobsites. The hailstorm is followed by intense heat, and despite Jake’s best efforts, fungus damage occurs at each one. The total damage from the fungus at all three jobsites is $35,000. Coverage is provided but limited to only $15,000. Later that summer, another covered peril resulted in a fungus loss. That second loss is denied because the aggregate limit had been exhausted in the first loss.

6. Waterborne Property

The insurance company pays up to $10,000 in a single occurrence for direct physical loss or damage by a covered peril to covered property while it is waterborne. This limit can be increased.

Supplemental Coverages

Provisions That Apply To Supplemental Coverages

There are 12 supplemental coverages. Each has its own default limit that can be increased by entering a higher limit on the schedule of coverages. Limits for any supplemental coverage are separate from the applicable limit for covered property, not part of it.

The limit available for coverage described under a supplemental coverage is the only limit available for it. It is not the total of the limit for a supplemental coverage and the limit for covered property. The limits are not added to or combined with limits for any other supplemental coverage or coverage extension. They are also not subject to coinsurance provisions that apply elsewhere in the coverage form.

1. Expediting Expenses (08 12 words added)

A covered peril may occur to a covered structure or building that causes the completion of the construction to be delayed. In such cases, the insurance company pays reasonable expenses that address the delay and expedite construction so that the construction meets the time frame terms of the construction contract. Examples of such expediting expenses are overtime pay, payroll for additional hired labor, transportation costs, storage expenses, and costs to rent additional equipment, but this term is not limited to just these. The limit in a single occurrence is $10,000, but it can be increased.

Note: The only expediting expenses paid are those needed to speed up delays that result from a covered peril. If delays have also occurred because of other perils or for other reasons, this coverage will not pay for those. The
08 12 edition makes the intent to cover only expediting expenses from covered perils clearer.

Example: A windstorm blows down the framing for a building and forces construction to start all over again. This puts the project two weeks behind schedule and could result in enforcing the $1,000 per day penalty clause in the construction contract. The project was already two weeks behind because cold weather delayed excavation, so the general contractor decides that this is a great opportunity to use his insurance to avoid contract penalties. He hires four additional workers plus paying overtime to the existing workers. This supplemental coverage pays for the additional workers and the overtime expenses but only for the part of the delay related to the windstorm delay. It does pay for the delays related to weather conditions.

2. Expense to Re-erect Scaffolding

When a building or structure is damaged, the scaffolding may need to be re-erected even though it is not actually damaged. This covers the named insured's expenses to re-erect scaffolding, but only if the building or structure damage was due to a covered loss. The most paid to do so is $5,000. This limit can be increased.

Note: The building or structure must have been damaged. There is no requirement that the scaffolding is damaged.

Example: A sudden burst of wind from a squall line causes a building under construction for Wally’s Winery to collapse partially. As a result, Brad's Builders must incur the extra expense to re-erect the scaffolding so construction can continue. This supplemental coverage pays those expenses up to the $5,000 limit.

3. Fire Department Service Charges (08 12 changes)

Coverage applies to the named insured’s liability for the fire department or volunteer fire department service charges.

The coverage provided is limited to only such charges the named insured incurs to have the fire department or volunteer fire department save or protect covered property from a covered peril.

Payment is limited to $1,000. This limit can be increased. This supplemental coverage is not subject to a deductible.

Note: The 08 12 edition deleted the words “assumed by contract or agreement prior to the loss” in the previous edition.

4. Ordinance or Law (Undamaged Parts of a Building)

a. A covered building or structure may sustain direct physical loss or damage from a covered peril, and a governmental entity then requires that the rest of it be demolished as part of the entity’s enforcement of ordinances, laws, or decrees. The insurance company pays for the value of the undamaged portions that must be demolished even though not damaged. Coverage only applies if the regulation requires demolishing the undamaged parts, regulates the construction or repair of the property, or establishes specific requirements for zoning or land use at the covered location. The ordinance, law, or decree must be in force at the time of loss.

b. There is no coverage for the following:

Costs to test for, monitor, clean up, remove, contain, treat, detoxify, neutralize, respond to, or assess the effects of pollutants
Loss or increased costs to enforce laws that require changes in the property because of the existence of or any activity of fungus
Costs to enforce laws that require testing for, monitoring, cleaning up, removing, containing, treating, detoxifying, neutralizing, responding to, or assessing the effects of fungus

c. This coverage is part of the applicable limit for coverage described under Property Covered, not in addition to it.

5. Ordinance or Law (Increased Cost to Repair and Cost to Demolish/Clear Site)
(08 12 changes)

a. The insurance company pays the enforcement-induced increased costs to repair, rebuild, or reconstruct the damaged portions of a building or structure, including any changes required to undamaged portions. The costs must occur because the building, zoning, or land use laws are enforced because covered building or structure sustains direct physical loss or damage from a covered peril.

The repaired or rebuilt property must be for a similar occupancy or the same purpose as the prior building unless regulations require a change. Increased construction costs are not covered until construction is actually done and completed. The time limit for completion is as soon as possible (within reason) but not more than two years following the date of loss. The building or structure may be repaired or rebuilt at the same location or rebuilt at another one. The insurance company may extend the two-year period to repair or replace if it does so in writing.

b. The insurance company also pays the costs to demolish and clear undamaged portions of the covered building or structure on the site of the covered loss. However, this is only when a government regulation in force at the time of the covered loss or damage requires it.

c. There is no coverage for the following:

Costs to test for, monitor, clean up, remove, contain, treat, detoxify, neutralize, respond to, or assess the effects of pollutants

Costs to enforce a law that requires testing for, monitoring, cleaning up, removing, containing, treating, detoxifying, neutralizing, responding to, or assessing the effects of fungus
Costs to comply with any law that should have been complied with before the covered loss but was not. Such a law would be in effect even if the building or structure was not damaged

d. The named insured may have the option to remain at the existing location. In that case, the insurance company pays up to $50,000 for the costs incurred to demolish the undamaged property and clear the site, plus the increased costs incurred to meet the ordinances, laws, or decrees. If the named insured decides to relocate instead of rebuilding, the insurance company pays up to $50,000 but not more than the amount paid to demolish and clear the covered building site plus the cost that would have been required to meet the regulations, laws, or ordinances at the existing site. The increased costs to build at the new site cannot exceed the amount required to construct a building or structure that matches the damaged building’s height, size, and style using similar materials at the existing site. The $50,000 limit can be increased.

The named insured may be required to relocate due to an ordinance or law being enforced. In that case, the insurance company pays up to $50,000 for the costs incurred to demolish and clear the site, plus the increased cost to construct a rebuild at a new location. The increased costs to build at the new site cannot exceed the amount required to construct a building or structure that matches the damaged buildings height, size, and style using similar materials. The $50,000 limit can be increased.

There are cases where the building is not repaired or replaced. In that case, the insurance company pays the amount actually spent to demolish and clear the site. The most paid is $50,000, but this limit can be increased.

6. Personal Property

Business personal property that is not intended to be installed in or become a permanent part of the covered building or structure is covered only when located in a covered building or structure. The most paid in a single occurrence is $10,000. This limit can be increased.

Example: Brad's Builders sets up a small temporary office area and break room on the ground floor of a building it is constructing. Loss or damage caused by a covered peril to the business personal property in this area is covered for up to $10,000.

7. Pollutant Cleanup and Removal

a. The named insured's expenses to extract pollutants from land or water are paid if a covered peril that occurred during the policy period in any way caused their release or discharge.

b. They are paid only if they are reported to the insurance company within 180 days of the date of loss.

c. Costs that are related to testing for, evaluating, observing, or recording pollutants are not paid, but costs of testing as part of the pollutant extraction process are covered.

d. The most paid at a single location is $25,000 for all such expenses during each separate 12-month policy period causes. This limit can be increased.

8. Rewards

a. This coverage pays rewards to eligible persons for information that leads to the arrest and conviction of anyone who commits an act of arson, vandalism, or theft that caused a loss covered under this policy. This Supplemental Coverage also pays rewards to eligible persons who return stolen covered property.

b. An eligible person is the first to return stolen covered property or voluntarily provide law enforcement with necessary information. Eligible persons do not include the following:

The named insured or any family members
The named insured's employees or their family members
Employees of the involved law enforcement agency
Persons who had custody of the covered property when it was stolen
Persons involved in the crime

c. A reward payment is not made until and unless the stolen covered property is returned or the person or persons who committed the crime are convicted.

d. The most paid in a single occurrence is $1,000. This limit can be increased.

Note: Rewards are often offered by insurance companies as part of their loss investigation and recovery efforts. This coverage is not used for those efforts. This is actual coverage available to the named insured even if the insurance company does not believe such a reward is necessary or beneficial.

9. Sewer Backup

a. Coverage applies to direct physical loss to covered property caused by or that results from the following:

Water or material that is being carried by water. Coverage only applies if it overflows, discharges through, or backs up from a sump, septic tank, drain, or sewer.
Water or material that is being carried by water below the ground’s surface. Coverage applies if it flows, leaks, seeps through, or exerts pressure on or into the described premises or driveways, sidewalks, foundations, swimming pools, or other structures, but not only to these.

b. Coverage does not apply to loss or damage that result from any of the following:

Water or material being carried by water that escapes from a sump pit when that pit does not have a sump pump (The word used is “equipped” with a sump pump. If the sump pump is in the pit but not operational, coverage could be in dispute.)
Failing to repair sump pumps and related equipment or to perform routine maintenance
Failing to keep obstructions from sewers and drains or to perform routine maintenance on them. The maintenance limitations above only apply when the named insured is responsible for the maintenance.

c. $10,000 is the most paid in any one occurrence. This limit can be increased.

10. Temporary Storage Locations

a. Coverage

The following are covered for direct physical loss or damage caused by or that results from a covered peril while at a location that is not listed on the schedule of coverages:

Materials and supplies that are intended to become a permanent part of the covered building or structure
Business personal property that is not intended to be part of a covered building, but this item applies to only personal property described under Supplemental Coverages 6. Personal Property.
Trees, shrubs, plants, and lawns but only as described and for the perils provided under Supplemental Coverages - 12. Trees, Shrubs, and Plants.

Example: The valuable plants, shrubs, and trees ordered from out of state arrive before the siding on the building is installed and are stored at a nearby greenhouse until the jobsite is ready. A sudden violent windstorm destroys the greenhouse and all the plants. This loss is not covered because windstorm is not a covered peril for trees, plants, and shrubs supplemental coverage. If the loss was due to fire, coverage would have applied for up to $10,000.

b. We Do Not Cover

Coverage does not apply to stored property that is not specifically destined for or identified in some way to become part of a covered building or structure.

c. Limit

The most paid in a single occurrence is $10,000. This limit can be increased.

11. Transit

a. Coverage

Coverage applies to direct physical loss or damage caused by or that results from a covered peril to the following property while being transported:

Materials and supplies that are intended to become a permanent part of the covered building or structure
Business personal property that is not intended to be part of a covered building but this item applies to only personal property described under Supplemental Coverages 6. Personal Property.
Trees, shrubs, plants, and lawns but only as described and for the perils provided under Supplemental Coverages 12. Trees, Shrubs, and Plants

b. Limit

The most paid in a single occurrence is $10,000. This limit can be increased.

12. Trees, Shrubs, and Plants (08 12 changes)

Note: This coverage has changed significantly because it no longer applies to only outdoor trees, shrubs, and plants. Because the word “outdoor” was eliminated, significant changes were added to limit the types of indoor trees, shrubs, and plants that are covered. Overall, coverage is broadened because of the vegetated roof coverage but may be more limiting because outdoor trees, shrubs, and plants must now be within 1,000 feet of a covered building or structure. The previous requirement was only that they are at the covered jobsite.

The first change is to provide two types of coverage.

a. Coverage Away From Buildings

Trees, shrubs, plants, and lawns planted or installed within 1,000 feet of a covered structure or property at covered jobsites are covered for direct physical loss or damage a covered peril causes. Trees, shrubs, plants, and lawns on or inside structures or buildings are excluded.

b. Coverage In or On Buildings

Coverage applies to direct physical loss or damage to trees, shrubs, plants, and lawns when they are installed or planted on or inside covered structures or buildings or that make up part of a vegetated roof. This coverage includes the expenses to remove the debris of such loss or damage.

c. Coverage Limitation

Only trees, shrubs, plants, and lawns that are being permanently installed or planted as part of the named insured’s construction project at a covered jobsite are covered.

d. We Do Not Cover

Trees, shrubs, or plants installed in flower boxes, flowerpots, hanging baskets, or other containers are not covered under any circumstances.

e. Covered Perils

The only covered perils are fire, lightning, explosion, riot, civil commotion, falling objects, and vandalism.

f. Limits

Coverage Away From Buildings

The limit for covered loss under Coverage Away from Building is $10,000 in a single occurrence.

Coverage In or On Buildings

The limit for covered loss under Coverage In or On Building is $10,000 in a single occurrence.

These limits can be increased.

Example: Maddingly Apartments has a vegetated roof on its clubhouse. It also has trees, plants, and shrubs in its atrium garden. Flower boxes are attached to the common balconies and filled with plants. There is also extensive landscaping in the gardens and throughout the open spaces between buildings and parking lots. When angry environmentalists storm the building site because of concern regarding a protected species, some of the newly planted trees and shrubs are damaged. Plants in the flower boxes are dumped, and the roof vegetation is trampled.

Up to $10,000 coverage is available for some trees, but those located further than 1,000 feet from any building are not covered.
Plants in the flower boxes were not covered.
Up to $10,000 coverage is available for the trampled vegetation.

Perils Covered

Coverage applies to risks of direct physical loss or damage unless the loss is limited or caused by an excluded peril.

Perils Excluded

1. Primary Exclusions (08 12 changes)

The first group of exclusions is essentially absolute. Subject to specific exceptions, loss or damage by each is totally excluded, regardless of any other cause, event, or condition that contributes to a loss, either concurrently or in any other sequence. The insurance company does not pay for any direct or indirect loss or damage caused by or that results from any of these causes, events, or conditions.

a. Civil Authority

There is no coverage for a loss that results from an order any civil or government authority issues. These orders may include seizure, confiscation, destruction, or quarantine of property, but this exclusion is not limited to only these. The only exception is when a civil authority destroys property to control a fire, which causes the loss or damage. This exception only applies if the fire results from a covered peril.

b. Earth Movement (08 12 changes)

Coverage does not apply to any natural or man-made earth movement, regardless of the cause. This exclusion applies regardless of where the movement begins. It applies even if the earth movement was being performed at the named insured’s request or for its benefit.

Example: Heavy equipment constantly moves up and down Mavis’ tiny dirt road. She notices her store’s foundation is cracking, and the walls are starting to buckle. The damage to the store is not covered because man-made earth movement caused it.

There are four exceptions.

Eruption, explosion, or effusion of a volcano may result in volcanic action. While the eruption, explosion, or effusion damage remains excluded, there is coverage for the loss or damage the volcanic action causes.
Damage or loss from a fire that results from earth movement is covered, but the earth movement damage remains uncovered.
Damage or loss from an explosion that results from earth movement is covered, but the earth movement damage remains uncovered. This exception does not apply to volcanic activity.
Property in transit is not subject to the earth movement exclusion.

c. Flood

The insurance company does not pay for loss or damage caused by flood. It also does not pay when waterborne material is carried or moved by flood, causing loss or damage. Damage by mudslide or mudflow is also excluded. This exclusion applies regardless of whether or not wind was involved in any of the above.

However, there are two exceptions:

Loss or damage by fire, explosion, or sprinkler leakage that results from flood is covered.
Covered property while in transit is not subject to the exclusion.

d. Fungus

Coverage does not apply to loss or damage caused by or related to fungus's existence or activity.

However, there are four exceptions:

The coverage that Coverage Extensions 5. Limited Fungus Coverage provides
When a specific peril results from fungus, coverage applies to the loss or damage that specified peril causes.
Loss due to fungus when the fungus is the result of fire or lightning
Loss due to collapse when caused by hidden decay

e. Nuclear Hazard

The insurance company does not cover loss or damage caused by or results from any nuclear reaction, radiation, or contamination. This is absolute and applies whether the nuclear incident was controlled or not, and by whatever means caused. Any loss the nuclear hazard causes is not treated as a loss that fire, explosion, or smoke causes. The only exception is when a fire results from a nuclear fire. Direct loss or damage from that fire is covered, but the damage from the nuclear hazard remains excluded.

f. Ordinance or Law

There is no coverage for any loss or increased construction costs because of enforcing any government regulation that controls the use, construction, or repair of any property. This includes demolishing that property and removing its debris. This exclusion also applies to enforcement that occurs even if the property has not been damaged and to increased costs incurred due to complying with the regulation.

g. Sewer, Septic Tank, Sump, or Drain Backup and Water below the Surface

Coverage does not apply to loss or damage to covered property when water or waterborne material backs up, overflows, or discharges in any way through a sewer, drain, sump, septic tank, eaves trough, or downspout.

Loss or damage caused when water or waterborne material below the surface exerts pressure on, flows, seeps, or leaks through or into buildings, sidewalks, driveways, foundations, swimming pools, or other structures, whether it occurs naturally or artificially, is also excluded.

There are two exceptions:

If any of the above results in fire, explosion, or sprinkler leakage, the insurance company pays for the loss or damages the fire, explosion, or sprinkler leakage causes.
Covered property while in transit is not subject to this exclusion.

h. War and Military Action

The insurance company does not pay for loss or damage caused by any act of war. Undeclared and civil war or warlike actions by a military force are all considered war. All actions taken to hinder or defend against an actual or expected attack by any government or sovereign authority that uses military personnel or other agents are also considered war and excluded. In addition, acts of insurrection, rebellion, revolution, or unlawful seizure of power and any action any government authority takes to prevent or defend against any such acts are excluded. If any action within the terms of this exclusion involves nuclear reaction, radiation, or contamination, this exclusion applies in place of the nuclear hazard exclusion.

Note: This means that the exception for resulting fire under the nuclear hazard is not covered when it is the result of war.

2. Secondary Exclusions

The second group of exclusions applies to loss or damage caused by or resulting from any of the following loss events. Some exclusions have exceptions, conditions, or limitations that should be examined carefully. The insurance company does not pay for any loss or damage caused by or that results from any of these events.

a. Contamination or Deterioration

Loss or damage that is caused by contamination or deterioration is excluded. This applies to corrosion, decay, fungus, mildew, mold, rot, and rust. It also applies to any quality, fault, or weakness in covered property that causes it to damage or destroy itself. This exclusion is not limited to only these described causes. However, if any of these results in a specified peril occurring, coverage applies to the loss or damage that specified peril causes.

b. Criminal, Fraudulent, Dishonest, or Illegal Acts

Coverage does not apply to loss caused by or results from criminal, fraudulent, dishonest, or illegal acts that any of the following commit alone or in collusion with another:

The named insured
Others with an interest in the property
Others to whom the property is entrusted
The named insured's partners, officers, directors, trustees, joint ventures, members, or managers, as applicable, based on the named insured’s type of business organization
Employees of any of the above groups. Employees are excluded even if the act occurs when they are not at work.

Coverage applies if employees destroy property. It does not apply if employees steal.

This exclusion does not apply to covered property in a carrier for hire’s custody.

Coverage for this exposure should be purchased using a commercial crime coverage form.

c. Defects, Errors, and Omissions (08 12 changes)

The insurance company does not pay for loss or damage caused by, that results from, or that consists of negligent or non-negligent errors, acts, or omissions that relate to any of the following:

Property specifications, design, installation, maintenance, or workmanship
Zoning, planning, siting, developing, compacting, or grading
Repairing, maintaining, renovating, installing, or remodeling

The exclusion applies whether or not an error, omission, or defect began at the covered building or structure. It also applies whether or not the error, defect, or omission was performed at the named insured’s request or for its benefit.

If a defect, error, or omission causes a specified peril to occur, the damage or loss that peril causes is covered.

d. Delay in Completion and Increased Construction Costs (08 12 change)

Direct or indirect loss or damage that is caused when construction, erection, or fabrication of a building or completing a structure is delayed, or its sequence changes are not covered. Any increased construction costs caused by or resulting from such delays are also excluded. Some examples of increased construction costs that are excluded are:

General conditions such as utility charges, maintenance, facilities, communications, and administrative personnel
Construction costs that increase
Additional construction expenses
An increase in overhead, materials, and labor costs
Soft costs
Loss of earnings and/or rental income

This exclusion applies except as Supplemental Coverages 1. Expediting Expenses provides. (Words added)

Example: The Mid-tier Apartment complex was near completion when the windstorm came through. The property loss was covered, but because the reconstruction started at the beginning of a very busy building season, the material and labor costs increased by 15%. The increased cost is excluded.

e. Electrical Currents

Loss caused by electrical currents or arcing is not covered unless the source of the electricity is lightning. The exception is that loss is covered when caused by a specific peril resulting from the electrical current or arcing.

f. Loss of Use and Consequential Loss

Loss or damage caused by or resulting from loss of use, delay, loss of market, or any consequential loss or damage of any kind is excluded.

Example: My Space Commercial Center was forced to delay its opening three months because of the wind loss to the new building. Instead of opening in October, it will open in January. My Space submits a loss of earnings claim before potential tenants abandoned it because of the move-in change date. This loss is not covered.

Note: Delay of completion coverage is available as an option.

g. Mechanical Breakdown

Loss or damage caused by mechanical breakdown or moving parts of machinery or machinery bursting or rupturing because of centrifugal force is excluded. The one exception is that when either of these results in a specified peril occurring, coverage applies to the loss or damage that specified peril causes.

h. Missing Property

The unexplained or mysterious disappearance of the covered property is excluded when there is no physical evidence to indicate what happened to it, and the only proof that a loss occurred is based on an audit or physical inventory.

The one exception is that this does not apply to covered property while it is in the custody of carriers for hire.

i. Pollutants

There is no coverage for loss caused by or that results from any release, discharge, seepage, migration, dispersal, or escape of pollutants.

However, there are three exceptions:

A specified peril causes the event
Coverage provided in Supplemental Coverages 7. Pollutant Cleanup and Removal
When a pollutant release results in a specified peril, the resulting loss from that specified peril to covered property is covered.

j. Steam Boiler Explosion

The insurance company does not pay for loss or damage caused by or that results from explosions of steam boilers, pipes, turbines, or engines.

However, there are two exceptions:

If an explosion results in a fire or combustion explosion, coverage applies to that resulting loss or damage.
Loss or damage caused by or that results from the explosion of gas or fuel in a firebox, flue, or combustion chamber is also covered.

Note: Equipment Breakdown Protection Coverage can be purchased to cover this gap.

k. Temperature/Humidity

Loss or damage to covered property caused by dryness, dampness, humidity, changes in or temperature extremes is excluded. If any of these events results in a covered peril occurring, the resulting loss or damage caused by that peril is covered.

l. Voluntary Parting

There is no coverage for loss or damage to covered property when voluntarily given to others, even if the surrender was due to a fraudulent scheme, trick, or false pretense. The good news is that Coverage Extensions 4. Fraud or Deceit provides limited coverage.

m. Wear And Tear

Loss or damage caused by wear, tear, marring, or scratching is excluded. The one exception is that if any of these results in a covered peril occurring, the covered property loss from that covered peril is covered.

What Must Be Done In Case Of Loss

1. Notice

The named insured must promptly notify the insurance company or its agent of a loss. The notice must include a description of the property lost or damaged. If a criminal act caused the loss, the appropriate law enforcement agency must also be notified. The insurance company has the right to require that any notice to it be in writing.

2. You Must Protect Property

During and after a loss, the named insured must take all reasonable steps to protect covered property from further loss. The insurance company pays reasonable costs the named insured incurs to do so if the named insured maintains accurate records to substantiate the costs. Paying these costs is not in addition to the policy limits. There is no coverage for any repairs or emergency measures performed on property not already damaged by a covered peril.

Note: It is important to realize that any such costs incurred will reduce the amount available to pay the actual loss.

Example: Joshua was pleased that the building would be complete in two days. Unfortunately, that night, vandals entered the building. The locks and some windows were broken. Joshua was so upset that, after he was notified of the loss, he neglected to contact anyone to secure the premises. The next night, the vandals returned. The initial claim is covered, but the damage from the second night is not because Joshua did not take any appropriate action to protect the building.

3. Proof of Loss

The named insured must complete and return the insurance company's prescribed proof of loss forms within 60 days after the company requests it. The information provided must include the time, place, and circumstances involved with the loss and information on any other insurance coverage that may apply. It must also include the named insured’s interest and the interest of others concerning the property involved, including lienholders, loss payees, and mortgagees. Any changes in the title to the property during the policy period must be disclosed, in addition to providing any other reasonable information the company may require to adjust and settle the loss.

4. Examination

Examination under oath may be required in matters that relate to the loss. The insurance company may request these examinations more than once, but such requests must be reasonable. If multiple persons are examined, the company has the right to examine each individual separately.

5. Records

The named insured must produce any records related to the loss. The insurance company must be allowed to make copies and take extracts of them as often as it reasonably requests. Records include tax returns and bank microfilms of all related cancelled checks, but records are not limited to just these.

6. Damaged Property

Damaged and undamaged property must be made available for the insurance company's inspection as often as reasonably necessary. It must also be allowed to take samples of the property to the extent necessary to adjust and settle the loss.

7. Volunteer Payments

The named insured may not voluntarily make payments, assume obligations, pay or offer rewards, or incur other expenses without the insurance company's express approval. If it does, it does so at its own expense. The only exceptions are those costs incurred to protect property, as item 2. above describes.

8. Abandonment

The named insured may not abandon damaged property to the insurance company without its written consent.

9. Cooperation

The named insured must cooperate with the insurance company. Any actions required of the named insured within this policy must be performed.

Valuation

1. Replacement Cost

The value of the covered property is based on its replacement cost.

a. Replacement Cost means

These are the necessary and reasonable costs of materials and labor the named insured incurs to repair or replace the part of the covered property that sustains direct physical loss or damage. There is no deduction for depreciation. Overhead and profit related to the lost or damaged covered property are included but cannot be for more than the amount charged in the construction contracts for the project and work.

If included within the limits, other related construction costs and expenses also incurred to repair or replace the lost or damaged part of the covered property are covered.

b. Replacement Cost Limitations

Replacement cost is not more than the cost to repair the lost or damaged property with similar materials for the same purpose and at the same job site.

Example: Mary is building a new house at 131 Robin Lane. A truck slides off the road and destroys the house midway through construction. Mary decides that she does not want to build at that location and trades her lot back to the developer for one at 145 Robin Lane instead. The insurance company will pay up to the same amount to build the house at 145 Robin Lane that it would have paid to replace the building at 131 Robin Lane.

c. Payment Limitation

If the lost or damaged covered property is repaired or replaced, payment does not exceed the amount the named insured spent to do so.

2. Pair or Set

The value of a loss that involves damage to or loss of one part of a pair or set is based on a reasonable proportion of the value of the entire pair or set. However, the loss of one part of a pair or set is not considered a total loss.

Note: This recognizes that the value of the whole is greater than the value of individual parts but that the remaining parts still have value as separates.

3. Loss to Parts

The value of a lost or damaged part of the property that consists of several parts is the cost to repair or replace only the lost or damaged part.

How Much We Pay

1. Insurable Interest

The insurance company does not pay more than the named insured's insurable interest in the covered property at the time of loss.

2. Deductible

The insurance company pays only the amount of loss that exceeds the deductible amount on the schedule of coverages.

Note: This is an occurrence deductible.

3. Loss Settlement Terms

Subject to other items in this section, the insurance company pays the least of the following:

The amount determined under Valuation

The cost to repair, replace, or rebuild the property with material of similar kind and quality to the extent possible
The limit that applies to the covered property

4. Catastrophe Limit

The most the insurance company pays in a single occurrence is the Catastrophe Limit on the schedule of coverages. This is regardless of the number of structures, equipment, described facilities, buildings (if this coverage form insures buildings), or any combination of these coupled with coverage that Coverage Extensions, Supplemental Coverages, or Other Coverages provide.

5. Coinsurance

Note: This condition can be waived.

a. When coinsurance applies to a coverage provided, the insurance company pays only part of the loss if the limit is less than the percentage of the value of the covered property on the schedule of coverages.

b. The following are the three steps to determine the amount of loss to be paid:

Step 1. Determine the full 100% value of the property as if it had been completed and as if no loss had occurred.

Step 2. Divide the covered property’s limit by the result determined in step 1.

Note: There is no coinsurance penalty if the result is1.00 or higher.

Step 3. There is a coinsurance penalty when step 2. is less than 1.00. Subtract the deductible from the amount of loss and then multiply the total amount of loss by the percentage determined in step 2.

The insurance company does not pay more than the amount determined in step 3. or the limit, whichever is less. It does not pay any remaining part of the loss.

c. If there is more than one limit on the schedule of coverages, this procedure applies separately to each limit.

d. If there is only one limit on the schedule of coverages, this procedure applies to the total of all covered property insured under that limit.

Example: The estimated completed value of a building on the schedule of coverages is $300,000. A $1,000 deductible applies. Construction is almost 90% complete when a fire causes a loss that amounts to $275,000. After a review of the changes made as construction progressed, the actual completed value would have been $325,000 if there were no loss. As a result, the loss is paid as follows:

Step1. The actual completed value is $325,000.

Step 2. $300,000 divided by $325,000 = .923. This is the coinsurance penalty factor.

Step 3. $275,000 minus the $1,000 deductible equals $274,000 multiplied by .923 = $252,902.

In this example, the insurance company pays $252,902, and the named insured is responsible for the remaining $21,098 penalty and $1,000 deductible.

6. Insurance under More Than One Coverage

Two or more coverages in the coverage form may apply to the same loss. In that case, the insurance company does not pay more than the value of the actual claim, loss, or damage sustained.

7. Insurance under More Than One Policy

a. Proportional Share

The named insured may have other coverage subject to the same terms as this coverage form. In that case, this coverage form pays only its share of the covered loss. That share is the proportion that its limit of insurance bears to the limits of insurance of all insurance that covers on the same basis.

b. Excess Amount

There may be other coverage available to pay for the loss other than as described in 7. a. above. In that case, this coverage form pays on an excess basis. It pays only the amount of covered loss that exceeds the amount due from the other coverage, whether collectible or not. Any payment is subject to the limit of insurance that applies.

Loss Payment

1. Loss Payment Options

a. Our Options

The insurance company makes the decision on how a loss will be paid – not the named insured or the third party. It may:

Pay the value of the lost or damaged property

Pay the cost to repair or replace the lost or damaged property
Rebuild, repair, or replace the property with similar property, to the extent possible and within a reasonable period of time.
Take any part or all of the property at the agreed on or appraised amount.

b. Notice of Our Intent to Rebuild, Repair, or Replace

The insurance company must notify the named insured of its intent to rebuild, repair, or replace within 30 days after receiving a properly completed proof of loss.

2. Your Losses

a. Adjustment and Payment of Loss

The insurance company adjusts all losses with and pays the named insured unless another loss payee named in the policy is involved.

b. Conditions for Payment of Loss

The insurance company pays a covered loss within 30 days after it receives a properly prepared proof of loss and the amount of loss is established. Either the amount of loss is determined through a written agreement between the company and the named insured or after an appraisal award is filed with the company.

3. Property of Others

a. Adjustment and Payment of Loss to Property of Others

The insurance company has the option to adjust and pay losses that involve property of others to the named insured acting either on the property owner’s behalf or to the property owner.

Note: There is no mention of who decides whether the named insured handles the adjustment or the insurance company addresses it directly.

b. We Do Not Have to Pay You if We Pay the Owner

The insurance company is not obligated to pay the named insured when it pays the property owner. In addition, if the property owner sues the named insured, the company has the option to defend the named insured in that suit.

Other Conditions

1. Appraisal

The insurance company and the insured may not always agree on the value of a covered claim. This condition provides one method to resolve disputed claims.

Either party can request an appraisal to determine the value of a disputed claim. Once requested, the parties have 20 days to obtain their own independent and competent appraisers and give their appraiser's name to the other party. The two appraisers then have 15 days to select a qualified, impartial umpire. If they cannot agree on an umpire within that time period, either can request that a judge in the court of record in the state where the property is located appoint one.

The appraisers then determine the claim’s value. They submit any differences to the umpire. Once any two of the three parties agree, the amount of loss is set.

Each party pays its own appraiser. Both parties share the umpire’s cost and other expenses equally.

2. Benefit to Others

The insurance provided does not directly or indirectly benefit any party with custody of the named insured's property.

3. Conformity with Statute

Any condition in this coverage form that conflicts with any applicable law is amended to conform to that law.

4. Estates

Note: This condition only applies if the named insured is an individual.

a. Your Death

If the named insured dies, the person who has custody of the named insured's property is an insured until a qualified legal representative is appointed. The named insured’s legal representative becomes an insured once he or she is appointed. Both are insureds, but only concerning the property this coverage form insures.

b. Policy Period is not Extended

This coverage does not extend past the policy’s expiration date.

5. Misrepresentation, Concealment, or Fraud

This coverage is void if any insured at any time willfully concealed or misrepresented a material fact related to the insurance provided, the property covered, or its interest in the property. It is also void if fraud or false swearing by any insured took place concerning the insurance provided or the property covered.

Note: The named insured must deal with the insurance company honestly. Its rights of recovery may be voided if it intentionally misrepresents or conceals a material fact or information. This means the insurance is treated as simply having never existed versus denying a particular claim.

6. Policy Period

Only covered losses that occur during the policy period are paid.

7. Recoveries

Paying the loss does not end the obligations of the named insured and the insurance company toward one another. Additional provisions apply if the insurance company pays a loss and the lost or damaged property is subsequently recovered, or the parties responsible for the loss pay for it.

Either party that recovers property or payment must inform the other. Recovery expenses that either party incurred are reimbursed first. If the named insured keeps the recovered property, it must refund the amount of the claim the insurance company paid unless the company agrees to a different amount. If the claim paid is less than the agreed loss due to applying a deductible or another limitation, any recovery is prorated between the named insured and the insurance company based on the company's respective interest in the loss.

8. Restoration of Limits

Payment of a claim does not reduce the limit available for future claims.

9. Subrogation

The insurance company acquires the named insured's rights of recovery from third parties after it pays a loss. The named insured must help the insurance company secure those rights. The company is not obligated to pay a loss if the named insured hinders or impairs the company's rights of subrogation. However, the named insured can agree in writing to waive recovery rights from others before a loss occurs.

10. Suit against Us

The insurance company cannot be sued by anyone for any coverage until all the terms of the coverage form are met. Suits must be brought within two years after the named insured first knew about a loss. If a state law invalidates this condition, any suit brought must comply with the provisions of that law and begin within the shortest period of time allowed by law.

11. Territorial Limits

Covered property must be located in the United States, its territories, and possessions, Canada, or Puerto Rico for coverage to apply.

12. Carriers for Hire

The named insured is permitted to accept shipping documents from transportation companies that limit the carrier's liability to amounts less than the covered property’s replacement cost or actual cash value.

Additional Coverage Limitations

1. Coverage Not Provided During Occupancy and Use

Coverage does not apply if a covered building or structure is partially or completely occupied or put to its intended use without the insurance company's written consent and agreement. This provision does not apply if permission to occupy is granted and there is such an entry on the schedule of coverages.

Example: ABC Construction builds four-unit condominium buildings. The entire building is constructed first, and then each unit is finished one at a time. Once a unit is finished, ABC attempts to sell it and transfer the title to free up capital. The insurance company agrees to this partial occupancy situation and verifies it by the appropriate entry on the schedule of coverages.

2. When Coverage Ceases

Coverage ends at the earliest of the following events:

The policy is cancelled or allowed to expire
The purchaser accepts the covered building or structure
The named insured's financial or insurable interest in the property ends
The named insured abandons the project. This only applies if the named insured has no intention to return and complete the project.
90 days after construction on a covered building or structure ends

Note: This is an important area that could cause the named insured problems. Even though coverage extends up to 90 days after construction is complete, this becomes two days when construction is completed only two days before the expiration date. In other words, 90 days of coverage is available after construction is complete, but only if 90 or more days remain until expiration. This coverage limitation is subject to several variations since insurance companies recognize the problems that can arise, particularly with coverage forms written on a reporting basis. This coverage limitation must be reviewed carefully and discussed with the client, with particular care taken to identify potential problems.

Example: Peter finishes a home and designates it as a model home. He believes it is covered under his builders’ risk coverage for up to 90 days and does not obtain separate insurance. Unfortunately, his builders’ risk coverage expired and was renewed three days after the model home was completed. Even though the coverage provided was not interrupted and was with the same carrier, the builders' risk coverage expired and, with it, the coverage on the completed model home.

Definitions

Defined terms are used throughout the coverage form. Restricting their meaning to their definition is how all parties have a clearer understanding of the intended coverage. The definitions can increase or decrease coverage, so they should be carefully reviewed. Twelve terms are defined:

1. Buildings or structures

In addition to buildings or structures, this definition includes the materials and supplies intended to become a permanent part of the building or structure. Foundations, grading, permanent fixtures, fencing, and attachments are also considered building or structures.

Note: This is very important because it affects what is considered completed value. A misunderstanding could result in a coinsurance penalty, if applicable.

2. Earth movement (08 12 changes)

This definition is a total re-write of the same definition in the previous edition.

This is a broad and expansive definition because of the nature of the property this coverage form insures. It means all of the following:

a. Movement of the ground, sediments, soil, strata, or substrates caused by an act of nature or man-made event.

Note: This item is similar to the definition in the prior edition, except that this exclusion has eliminated both mudslide and mudflow because they are now part of the flood exclusion.

All of the following are considered earth movement, but the term is not limited to only these:

Earthquake. This includes events associated with earthquake, such as aftershocks, ground displacement, or the ground liquefying.
Volcanic eruption or explosion. This also includes any effusion.
Ground shaking or rupturing before, during, and after a volcano erupts
Landslide
Subsidence of man-made mines. This applies to mines that are currently in use as well as to those that are not.
Any other movement of the ground, such as sinking, shifting, contracting, or rising, when it results in covered property tilting, leaning, shifting cracking or settling. Examples include ground shrinking, expanding, eroding, freezing, thawing, and soil compacting. Another example is movement of the ground caused by water moving below its surface.

One important exception is sinkhole collapse.

b. Movement of the ground, sediments, soil, strata, or substrates caused by any act, error, or omission.

Note: The following section is new to this definition.

All of the following are considered earth movement, but the term is not limited to only these:

Excavation or construction activities. This term applies even if the activities occurred beneath covered property and even if the excavation or construction was performed at the named insured’s request or for its benefit.
Vibration or blasting, regardless of the vibration or blasting’s source
Processes used to remove substances such as oil, gas, water, steam, minerals, or other material from underground areas. Mining, drilling, hydraulic fracturing (commonly known as fracking), or extracting geothermal energy are examples of these processes.
Injecting water beneath the ground’s surface into underground rock to create geothermal energy. This can be wastewater from fracking or water from any other source.
Any process to remove carbon dioxide or other forms of carbon from the atmosphere. The reason for doing so must be to store it underground in reservoirs, geologic formations, or other similar underground storage. Examples of this removal process are carbon sequestration and biosequestration.

3. Flood

Water that overflows or inundates areas that are usually dry and not covered by water. The overflow can be the result of natural or artificial causes that could be caused by an animal, human, or natural force.

The term flood includes the following but is not limited to just these:

Overflow of inland or tidal waters, waves, tidal waves, or tsunamis. This applies regardless of the impact of wind. Any spray is also considered flood. Storm surge is also considered flood. Storm surge (but not limited to it)
Unusual and rapid accumulation or runoff of surface waters from any source
Mudslides or mudflows but only when caused by unusual and rapid accumulation of surface waters or waves or water currents greater than anticipated cyclical levels

4. Fungus

The definition of fungus is extremely broad. The first item in the definition is fungus itself that also includes mold and mildew but is not restricted to those. Additional items are then listed. Protists such as algae and slime mold are included along with other protists. Wet rot, dry rot, and bacterium are also found under this definition. Chemicals, matter, or compounds produced or released by any of the above items are also fungus, including their toxins, spores, fragments, and metabolites, such as microbial volatile organic compounds.

5. Jobsite

Any location, project, or work site where the named insured constructs, erects or fabricates buildings or structures.

6. Limit

The amount of coverage that applies to the insured property.

7. Pollutant

This is a broad and expansive term. It includes solids, liquids, thermal or radioactive contaminants and irritants including, but not limited to, acids, alkalis, chemicals, fumes, smoke, soot, vapor, and waste. Waste also includes materials intended for recycling, reclamation, and reconditioning, as well as for disposal. Visible and invisible electrical or magnetic emissions and sound emissions are also considered pollutants.

8. Schedule of coverages

This is any page labeled as such that contains coverage information, including declarations or supplemental declarations.

9. Sinkhole collapse

A sinkhole is created when an underground opening is created by water acting on limestone or some other rock formation. The earth’s surface suddenly settling or collapsing into that sinkhole is sinkhole collapse. Sinkhole collapse does not include either the land’s value or the cost to fill sinkholes.

10. Specified perils

The named perils of aircraft, civil commotion, explosion, falling objects, fire, hail, fire extinguishing equipment leakage, lightning, riot, sinkhole collapse, smoke, sonic boom, vandalism, vehicles, volcanic action, water damage, the weight of sleet, snow or ice and windstorm. Two terms need further explanation.

Falling objects do not include loss to personal property stored in the open. It also does not include damage to the interior of buildings or personal property stored in buildings unless a falling object first breaches the building's exterior.

Water damage is the sudden or accidental discharge or leakage of water or steam. However, it must directly result from a part of the system or appliance that holds the water or steam cracking or breaking.

11. Terms

All the policy provisions, limitations, exclusions, conditions, and definitions that apply to this coverage.

12. Volcanic action

An airborne volcanic blast or shock wave. It is also ash, dust, and particulate matter along with any lava flow. The term does not include the cost of removing dust, ash, or particulate matter from the covered property unless there is direct physical damage to the property.

IM 7056–SCHEDULE OF COVERAGES–BUILDERS' RISK (01 12 changes)

This Schedule of Coverages is used with IM 7051–Builders' Risk Coverage–Scheduled Jobsite Form. IM 7056 contains the following information:

Policy Number (01 12 addition)

The 01 12 edition added a space to enter the policy number.

Scheduled Jobsites

All covered jobsites must be listed. Coverage does not apply to any premises not listed. IM 7087–Additional Builders' Risk Schedule is used to list jobsites that cannot fit on IM 7056 because of space considerations.

Catastrophe Limit

This limit is the most paid in a single occurrence or loss, regardless of the number of buildings, structures, jobsites, or any combination of these.

Coverage Extensions

The limits on the Schedule of Coverages for the following coverages apply to all covered locations:

Additional Debris Removal Expenses

The limit is $5,000 unless a different limit is entered.

Emergency Removal

This applies for ten days unless a different number of days is entered.

Limited Fungus Coverage

The limit is $15,000 during each 12-month period unless a different limit is entered.

Supplemental Coverages

Each of these coverages provides additional limits of coverage or additional coverage. Required entries vary by type of coverage.

Expense to Re-erect Scaffolding

The limit is $2,500 unless a different limit is entered.

Fire Department Service Charges

The limit is $1,000 unless a different limit is entered.

Pollutant Cleanup and Removal

The limit is $10,000 during each 12-month period unless a different limit is entered.

Temporary Storage Locations

The limit is $10,000 unless a different limit is entered.

Transit

The limit is $10,000 unless a different limit is entered.

Deductible

One deductible is entered that applies in a single occurrence.

Coinsurance

There must be an entry to show that either 100% coinsurance applies or coinsurance provisions are waived.

Additional Information (01 12 change)

This section of the schedule of coverages lists endorsements and forms included when the policy is issued.

The previous edition referred to this section as Optional Coverages and Endorsements.

IM 7051–BUILDERS' RISK COVERAGE–SCHEDULED JOBSITE FORM COVERAGE FORM ANALYSIS

This analysis is of the 08 12 edition.

This coverage form is identical to IM 7050–Builders' Risk Coverage–Scheduled Jobsite Form–Comprehensive Form analyzed above except for four sections. This analysis addresses only the four sections that are different.

Property Not Covered

IM 7050 does not cover Trees, Shrubs, or Plants but Supplemental Coverages 12. Trees, Shrubs, and Plants provides a limited type of coverage. IM 7051 also excludes this property but does not provide the Supplemental Coverage.

IM 7050 does not cover Waterborne Property but Coverage Extensions 6. Waterborne Property provides some limited coverage. IM 7051 also excludes this property but without any Coverage Extension.

Coverage Extensions

The following Coverage Extensions in IM 7050 are not in IM 7051:

Emergency Removal Expenses
Fraud And Deceit
Waterborne Property

Supplemental Coverages

The only Supplemental Coverages in IM 7051 are Expense to Re-erect Scaffolding, Fire Department Service Charges, Pollutant Cleanup and Removal, Temporary Storage Locations, and Transit. The Expense to Re-erect Scaffolding limit in IM 7050 is $5,000. It is $2,500 in IM 7051.

The following Supplemental Coverages in IM 7050 are not in IM 7051:

Expediting Expenses
Ordinance or Law (Undamaged Parts of A Building)
Ordinance or Law (Increased Cost to Repair and Cost to Demolish/Clear Site)
Personal Property
Rewards
Sewer Backup
Trees, Shrubs, and Plants

Perils Excluded

The exclusions in IM 7050 for Ordinance or Law and Sewer, Septic Tank, Sump or Drain Backup and Water below the Surface have exceptions for the coverage that various Supplemental Coverages provides. IM 7051 does not have similar exceptions because it does not provide these Supplemental Coverages.
Both IM 7050 and IM 7051 exclude Contamination or Deterioration, Temperature/Humidity, and Wear and Tear. However, IM 7050 has exceptions for damage caused by a covered peril. IM 7051 does not have the exceptions that are in IM 7050.

· IM 7051 contains four additional exclusions. The new exclusions are all part of 2. Secondary Exclusions:

Freezing

Loss or damage caused when water, other liquids, powder, or molten material leak from plumbing, heating, or air conditioning systems or when appliances freeze is not covered. There are two exceptions:

Damage to fire protective systems is covered.
Coverage applies if the named insured either maintains heat in the building or drains the equipment and turns off the supply when heat is not maintained.

Materials And Workmanship

Loss or damage caused by faulty, inadequate, or defective materials or workmanship. The one exception is for any loss caused by a resulting covered peril is covered.

Rain, Snow, Ice, or Sleet

Loss or damage to property that is in the open and not yet a part of the permanent existing building when caused by rain, snow, ice, or sleet. The one an exception is for property in the custody of carriers for hire.

Settling, Cracking, Shrinking, Bulging, or Expanding

Loss or damage caused by or that results from any of these but only with respect to pavements, foundations, walls, ceilings, glass, or roofs. However, loss caused by any resulting covered peril is covered.

Additional Coverage Limitations

No option is available on the declarations to elect a permission to occupy option. This means that a written statement must be received from the insurance company before any building is occupied if the named insured wants coverage to continue.

IM 7057–SCHEDULE OF COVERAGES–BUILDERS' RISK–CONTRACTORS' REPORTING FORM (01 12 changes)

This Schedule of Coverages is used with IM 7052–Builders' Risk Coverage–Contractors' Reporting Form.
IM 7057 contains the following information:

Policy Number (01 12 addition)

The 01 12 edition added a space to enter the policy number.

Limits

A limit of insurance is entered for each of the following:

Course Of Construction Limit

This is the most paid for loss to any one building or structure for this coverage.

Contingent Coverage Limit

This is the most paid for loss to any one building or structure for this coverage.

Difference In Conditions Coverage Limit

This is the most paid for loss to any one building or structure for this coverage.

Catastrophe Limit

This is the most paid in a single occurrence or loss, regardless of the number of buildings, structures, jobsites, or any combination of these.

Coverage Extensions

The limits on the Schedule of Coverages for the following coverages apply to all covered locations:

Additional Debris Removal Expenses

The limit is $5,000 unless a different limit is entered.

Emergency Removal

This applies for ten days unless a different number of days is entered.

Emergency Removal Expenses

The limit is $10,000 unless a different limit is entered.

Fraud and Deceit

The limit is $50,000 unless a different limit is entered.

Limited Fungus Coverage

The limit is $15,000 during each 12-month period unless a different limit is entered.

Waterborne Property

The limit is $10,000 unless a different limit is entered.

Supplemental Coverages

Each of these coverages provides additional limits of coverage or additional coverage. Required entries vary by type of coverage.

Expediting Expenses

The limit is $10,000 unless a different limit is entered.

Expense to Re-erect Scaffolding

The limit is $5,000 unless a different limit is entered.

Fire Department Service Charges

The limit is $1,000 unless a different limit is entered.

Ordinance or Law (Undamaged Parts of a Building)

Covered. There are no other entries.

Ordinance or Law (Increased Cost to Repair and Cost to Demolish/Clear Site)

The limit is $50,000 unless a different limit is entered.

Personal Property

The limit is $10,000 unless a different limit is entered.

Pollutant Cleanup and Removal

The limit is $25,000 during each 12-month period unless a different limit is entered.

Rewards

The limit is $1,000 unless a different limit is entered.

Sewer Backup

The limit is $10,000 unless a different limit is entered.

Temporary Storage Locations

The limit is $10,000 unless a different limit is entered.

Transit

The limit is $10,000 unless a different limit is entered.

Trees, Shrubs and Plants

The limit is $10,000 unless a different limit is entered.

Deductible

One deductible is entered that applies in a single occurrence.

Reporting Conditions

The estimated completed value of each covered building or structure is reported monthly, quarterly, annually, or any other specified period. Premiums are adjusted monthly, quarterly, annually, or any other specified period.

Note: Reporting conditions may be waived.

Additional Premium Due After Expiration

When the premium is based on reports of value, any additional premium the named insured owes is due and payable on the date stated on the billing statement. This is based on the rate that applies to the Coverage/Construction.

Premiums

Spaces are provided to enter the deposit premium and the minimum premium.

Permission to Occupy

One of the following boxes must be checked:

Permission to occupy is not granted
Additional Coverage Limitations 1. Occupancy and Use is deleted.

When this box is selected, a month, date, and year must also be entered. The named insured is thereby permitted to occupy the covered property after the date entered into the spaces provided and continue to be covered.

Additional Information (01 12 change)

This section of the schedule of coverages lists endorsements and forms included when the policy is issued.

The previous edition referred to this section as Optional Coverages and Endorsements.

IM 7052–BUILDERS' RISK COVERAGE–CONTRACTORS' REPORTING FORM ANALYSIS

This analysis is of the 08 12 edition.

This coverage form is identical to IM 7050–Builders' Risk Coverage–Scheduled Jobsite Form–Comprehensive Form analyzed earlier except for four sections. This analysis addresses only the four sections that are different.

Property Covered

One coverage is changed.

1. Course of Construction

The coverage limitations are modified to do the following:

· Not requiring jobsites to be described on the schedule of coverages.

· Add a statement that the coverage limit cannot be combined with or added to the limit for any other coverage that Property Covered describes.

Two coverages are added.

2. Contingent Coverage

Note: This coverage protects the named insured when its client neglects to purchase appropriate insurance coverage.

a. Coverage

Coverage applies to direct physical loss or damage to buildings or structures that are in the course of construction, erection, or fabrication. The loss or damage must be caused by or result from a covered peril.

b. When Coverage Applies

Coverage applies only when the building purchaser contractually agrees to maintain insurance coverage but fails to do so. When a loss occurs and because the purchaser had not purchased the insurance, this coverage applies only to the named insured’s interest in the building or structure that it is unable to collect otherwise.

c. Coverage Limitations

Coverage only applies if there is a limit on the schedule of coverages for Contingent Coverage and the buildings or structures in the course of construction are at the named insured's jobsite. This limit is not to be combined with or added to the limit for any other coverage described in Property Covered.

Example: Paul is a custom homebuilder. He gives his customers the option to purchase their own builders' risk coverage. If they do, they agree contractually to provide the coverage so that Paul's interest is also protected. Maxine signs the construction contract and the agreement but neglects to contact her insurance agent to arrange the coverage. A loss occurs, and Paul discovers there is no coverage on the project. Paul must attempt to collect the loss from Maxine. If he cannot, his insurance company pays based on this Contingent Coverage.

3. Difference in Conditions Coverage

a. Coverage

b. When Coverage Applies

Coverage only applies when the named insured is contractually required to provide Difference in Conditions Coverage for a building or structure. The “difference” is between the direct physical loss and the specified perils. This coverage does not cover any peril within the specified perils definition. This coverage also does not cover any peril excluded under this coverage form.

c. Coverage Limitations

Coverage only applies if there is a limit on the schedule of coverages for Difference in Conditions Coverage and the buildings or structures in the course of construction are at the named insured's jobsite. This limit is not to be combined with or added to the limit for any other coverage described in Property Covered.

Example: Paul’s latest client agrees to provide basic perils coverage for his new home but requires that Paul obtain difference in conditions coverage for other potential perils.

Scenario 1: Paul discovers that copper valued at $10,000 is stolen from the jobsite. Because theft is not a specified peril, and theft is not an excluded peril, the loss is covered by this coverage.

Scenario 2: Paul's coverage does not respond when windstorm destroys the building because windstorm is a specified peril that should be covered under the client’s policy.

Property Not Covered

Item 5. in IM 7050 is Standing Building or Structure. It excludes coverage for any part of a standing building or structure that was wholly or partially constructed, erected, or fabricated prior to this coverage form’s effective date. Buildings or structures being rehabilitated or renovated are also not covered Examples of rehabilitation and renovation are alterations, improvements, repairs, and additions.

Item 5. in IM 7052 is Rehabilitation or Renovation Property. It excludes only standing buildings or structures that are being renovated or rehabilitated. Examples of rehabilitation and renovation are alterations, improvements, repairs, and additions. New construction that started before this policy’s inception date is not excluded.

Note: This is an important difference in coverage.

How Much We Pay

4. Catastrophe Limit in IM 7052 states that it includes one or more coverages described under Property Covered. This is not in IM 7050 because Property Covered in IM 7050 has only one coverage.

IM 7050 contains coinsurance provisions. IM 7052 does not because it is a reporting form.

Reporting Conditions

This provision in IM 7052 is not in IM 7050. It outlines the detailed steps in the reporting process, including the consequences for not submitting reports or not reporting proper values.

1. Reports

a. You Will Report to Us

A report of the estimated completed value of each building or structure must be submitted to the insurance company within 30 days after the end of each reporting period. The report must include each building or structure’s estimated completion cost, address, and construction classification.

b. Cancellation

If coverage is cancelled, the report described above must be provided for the period up to and including the cancellation date. Additional premium will be calculated based on the information and payment required.

2. Premium Computation and Adjustment

Premiums are calculated by multiplying the reported values by the reporting rate on the schedule of coverages. The adjustment period may be annual or for some other period.

a. Annual Adjustment

If the premium is adjusted annually, the insurance company compares the calculated premium to the deposit premium. If the calculated premium exceeds the deposit, the named insured pays the insurance company the difference. If the calculated premium is less than the deposit, the insurance company refunds the difference to the named insured, subject to any minimum premium that applies.

b. Other Adjustment Period

If the premium adjustment is other than annual, the insurance company draws down the deposit premium based on reports until the deposit is exhausted. After that, the named insured pays an additional premium to the company based on the provided reports. At expiration, the insurance company returns any remaining deposit premium in excess of the minimum premium to the named insured.

3. Provisions That Affect How Much We Pay

Three provisions apply to reports submitted that may affect the amount of loss the insurance company pays.

a. Failure to Submit Reports

If no required reports have been submitted prior to when a loss occurs, the most the insurance company pays for that loss is 90% of the limit.

b. Reported Values are less than the Full Value

If the value reported is less than the actual value, the insurance company pays only a proportion of the loss. That proportion is developed by dividing the reported value by the actual estimated completed value. The deductible is then subtracted from the loss, and the remaining amount is multiplied by the proportion to determine the payment.

Example: The estimated completed value of Building #55 was reported as $275,000. A fire occurs midpoint through the construction period. Based on the expenses incurred up to that date, the actual estimated completed value was $325,000. The loss is $150,000. The payment will be 275,000/325,000 X 149,000 (150,000-1,000 deductible) = $126,077.

c. We Will Not Pay More than the Limit

The insurance company does not pay more than the limit of insurance that applies even if the value reported used to calculate the premium exceeds that limit.

IM 7058–SCHEDULE OF COVERAGES–BUILDERS' RISK AND INSTALLATION FLOATER (01 12 changes)

This Schedule of Coverages is used with IM 7053–Builders' Risk Coverage–Builders' Risk and Installation Floater Form. IM 7058 contains the following information:

Policy Number (01 12 addition)

The 01 12 edition added a space to enter the policy number.

Limits

A limit of insurance is entered for each of the following:

Course Of Construction Limit

This is the most paid for loss to any one building or structure for this coverage.

Contingent Coverage Limit

This is the most paid for loss to any one building or structure for this coverage.

Difference In Conditions Coverage Limit

This is the most paid for loss to any one building or structure for this coverage.

Installation Floater Coverage

This limit is the most paid for loss or damage at any single installation project.

Catastrophe Limit

This is the most paid in a single occurrence or loss, regardless of the number of buildings, structures, or jobsites.

Coverage Extensions

The limits on the Schedule of Coverages for the following coverages apply to all covered locations:

Additional Debris Removal Expenses

The limit is $5,000 unless a different limit is entered.

Emergency Removal

This applies for ten days unless a different number of days is entered.

Emergency Removal Expenses

The limit is $10,000 unless a different limit is entered.

Fraud and Deceit

The limit is $50,000 unless a different limit is entered.

Limited Fungus Coverage

The limit is $15,000 during each 12-month period unless a different limit is entered.

Waterborne Property

The limit is $10,000 unless a different limit is entered.

Supplemental Coverages

Each of these coverages provides additional limits of coverage or additional coverage. Required entries vary by type of coverage.

Expediting Expenses

The limit is $10,000 unless a different limit is entered.

Expense to Re-erect Scaffolding

The limit is $5,000 unless a different limit is entered.

Fire Department Service Charges

The limit is $1,000 unless a different limit is entered.

Ordinance or Law (Undamaged Parts of a Building)

Covered. There are no other entries.

Ordinance or Law (Increased Cost to Repair and Cost to Demolish/Clear Site)

The limit is $50,000 unless a different limit is entered.

Personal Property

The limit is $10,000 unless a different limit is entered.

Pollutant Cleanup and Removal

The limit is $25,000 during each 12-month period unless a different limit is entered.

Rewards

The limit is $1,000 unless a different limit is entered.

Sewer Backup

The limit is $10,000 unless a different limit is entered.

Temporary Storage Locations

The limit is $10,000 unless a different limit is entered.

Transit

The limit is $10,000 unless a different limit is entered.

Trees, Shrubs, and Plants

The limit is $10,000 unless a different limit is entered.

Deductible

One deductible is entered that applies per occurrence.

Reporting Conditions

Note: Reporting conditions may be waived.

Additional Premium Due After Expiration

Premiums

Spaces are provided for the deposit premium and the minimum premium.

Permission to Occupy, Builders' Risk Coverages

One of the following boxes must be checked:

Permission to occupy is not granted
Additional Coverage Limitations 1. Occupancy and Use is deleted.

This means that permission is granted to occupy the covered property after the date entered in the spaces provided.

Additional Information (01 12 change)

This section of the schedule of coverages lists endorsements and forms included when the policy is issued.

The previous edition referred to this section as Optional Coverages and Endorsements.

IM 7053–BUILDERS' RISK COVERAGE–BUILDERS' RISK AND INSTALLATION FLOATER FORM ANALYSIS

This analysis is of the 08 12 edition.

This coverage form is identical to IM 7050–Builders' Risk Coverage–Scheduled Jobsite Form–Comprehensive Form analyzed above, except for nine sections. This analysis addresses only the nine sections that are different.

Property Covered

Note: The primary change is that Installation Floater Coverage is added. However, the Builders' Risk coverage is also changed.

1. Builders' Risk Coverages

One coverage is changed.

a. Course of Construction

The coverage limitations are modified to do the following:

· Not require a description of jobsites on the schedule of coverages

· Add a statement that the coverage limit cannot be combined with or added to the limit for any other coverage described in Property Covered

Two coverages are added.

b. Contingent Coverage

Note: This coverage is for the protection of the named insured when its client neglects to purchase appropriate insurance company.

Coverage

When Coverage Applies

Coverage applies only when the building purchaser contractually agrees to maintain insurance coverage but fails to do so. When a loss occurs and because the purchaser had not purchased the insurance, this coverage applies for only the named insured’s interest in the building or structure that it is unable to collect otherwise.

Coverage Limitations

c. Difference in Conditions Coverage

Coverage

When Coverage Applies

Coverage only applies when the named insured is contractually required to provide Difference in Conditions Coverage for a building or structure. The “difference” being provided is that between the direct physical loss and the specified perils. This coverage does not provide coverage for any peril within the specified perils definition. This coverage also does not cover any peril excluded under this coverage form.

Coverage Limitations

2. Installation Floater Coverage

Note: This new coverage is unique to IM 7053.

a. Coverage

Coverage applies to direct physical loss or damage caused by a covered peril to the named insured's materials, supplies, machinery, fixtures, and equipment, but only when related to its construction project. Similar property of others in the named insured’s care, custody, or control is also covered.

b. Coverage Limitations

This coverage applies to only property that will become a permanent part of the named insured's installation project. It applies only when there is a limit for Installation Floater Coverage on the schedule of coverages.
The insurance company covers only installation projects at the named insured's jobsites.
The Installation Floater Coverage limit is not to be combined with or added to the limit for any other coverage described in Property Covered.

Property Not Covered

Contraband, Land, Trees, Shrubs and Plants, and Waterborne Property are the same as in IM 7050.

Two Property Not Covered items in IM 7050 are different in IM 7053:

Not a Permanent Part of Building or Project

The first part of the item that applies to Builders’ Risk is unchanged. A second part specific to the Installation Floater is added.

With respect to Installation Floater Coverage, the insurance company does not insure materials, supplies, machinery, tools, equipment, and business personal property that are not intended to be a permanent part of a covered installation project.

Roadways and Walkways

The first part of the item that applies to Builders’ Risk is unchanged. A second part specific to the Installation Floater is added.

With respect to Installation Floater Coverage, the insurance company does not insure walkways, roadways, or other paved surfaces unless they are specifically included in the named insured's installation project.

Two additional types of Property Not Covered are added:

Airborne Property

This property is excluded except when it is in transit on regularly scheduled airline flights.

Buildings and Structures

This property is excluded only with respect to Installation Floater Coverage. Coverage does apply to property that is part of the named insured's installation project, and that is connected with any building or structure.

There is one substitution:

Item 5. in IM 7050 is Standing Building or Structure. It removes coverage for any part of a standing building or structure that was wholly or partially constructed, erected, or fabricated before this coverage form’s effective date. Buildings or structures being rehabilitated or renovated are also excluded. Examples of rehabilitation and renovation are alterations, improvements, repairs, and additions.

Item 6 in IM 7053 is Rehabilitation or Renovation Property. It is similar to item 5. in IM 7050. It excludes only standing buildings or structures being renovated or rehabilitated. Examples of rehabilitation and renovation are alterations, improvements, repairs, and additions.

It also does not exclude coverage for new construction that started before this policy’s inception date.

Note: This is an important difference in coverage.

This item states that materials, supplies, machinery, fixtures and other equipment the named insured uses to install, construct, or lift as part of an installation project are covered property.

Supplemental Coverages

The supplemental coverages in IM 7050 and IM 7053 are identical. However, IM 7053 has additional words that apply to the installation coverage.

1. Expediting Expenses

Under a. Coverage, the words "or installation project" are added.

6. Personal Property

Under a. Coverage and b. Coverage limitation, the words "or installation project" are added.

9. Sewer Backup

Under a. Coverage, the words "a covered building or structure or installation project" replace the words "covered property."
Under a. 2), the words "or installation project" are added.

10. Temporary Storage Locations

Under a. Coverage 1), the words "or installation project" are added.
Under a. Coverage 3), the items temporarily in storage at a location other than a jobsite are changed so that coverage applies to items temporarily in storage at a location not described on the schedule of coverages.
Under b. We Do Not Cover, the words "or installation project" are added.

11. Transit

Under a. Coverage 1), the words "or installation project" are added.

Perils Excluded

2. d. Delay in Completion and Increased Construction Costs adds the words installation and installation project throughout. This recognizes the addition of Installation Floater coverage.

Valuation

1. Replacement Cost is changed to add the words installation and installation project throughout. This recognizes the addition of Installation Floater coverage.

How Much We Pay

4 Catastrophe Limit is broadened to include both coverages on this coverage form.

IM 7050 contains 5. Coinsurance. IM 7053 does not because it is a reporting form.

Reporting Conditions

This provision in IM 7053 is not in IM 7050. It outlines the detailed steps in the reporting process and the consequences for failing to submit reports or to report proper values. It is based on entries made on the schedule of coverages.

1. Reports

a. You Will Report to Us

A report of the estimated completed value of each building or structure must be submitted to the insurance company within 30 days after the end of each reporting period. The report must include the estimated completion cost, address, and construction classification of each building or structure.

b. Cancellation

2. Premium Computation and Adjustment

Premiums are calculated by multiplying the reported values by the reporting rate on the schedule of coverages. The adjustment period may be annual or for some other period.

a. Annual Adjustment

b. Other Adjustment Period

If the premium adjustment is other than annual, the insurance company draws down the deposit premium based on reports until the deposit is used up. After that, the named insured pays additional premium to the company based on the provided reports. At expiration, the insurance company returns any remaining deposit premium in excess of the minimum premium to the named insured.

3. Provisions That Affect How Much We Pay

Three provisions apply to reports submitted that may affect the amount of loss that the insurance company pays.

a. Failure to Submit Reports

If no required reports have been submitted prior to when a loss occurs, the most that the insurance company pays for that loss is 90% of the limit.

b. Reported Values are less than the Full Value

c. We Will Not Pay More than the Limit

The insurance company does not pay more than the limit of insurance that applies even if the value reported used to calculate the premium exceeds that limit.

2. Installation Floater Coverage

These are the Installation Floater Coverage reporting conditions.

a. Reports

1) You Will Report to Us

A report of the total receipts earned from the named insured's installation projects is to be submitted to the insurance company within 30 days after the end of each reporting period. Receipts that have not been collected must be reported in addition to those that have been collected. Receipts from materials, labor, reasonable overhead and profit, and delivery charges that make up part of the installation project(s) must be included in the reports.

2) Cancellation

If coverage is cancelled, the report described above must be provided for the period up to and including the cancellation date. The calculated additional premium for that period must then be paid.

b. Premium Computation and Adjustment

Premiums are calculated by multiplying the reported receipts by the reporting rate on the schedule of coverages. The adjustment period may be annual or for some other period.

(1) Annual Adjustment

(2) Other Adjustment Period

If the premium adjustment is other than annual, the insurance company draws down the deposit premium based on reports until the deposit is exhausted. After that, the named insured pays additional premium to the company. At expiration, any remaining deposit premium in excess of the minimum premium is returned to the named insured.

c. Provisions That Affect How Much We Pay

Three provisions apply to reports submitted that may affect How Much We Pay.

(1) Failure to Submit Reports

If required reports are not submitted and a loss occurs, the most that the insurance company pays for that loss is 90% of the limit.

(2) Reported Values Are Less than the Full Value

If the receipts reported are less than the actual receipts, the insurance company pays only a proportion of the loss. That proportion is determined by dividing the reported receipts by the actual receipts. The deductible is then subtracted from the loss, and the remaining amount is multiplied by the proportion.

3) We Will Not Pay More than the Limit

The insurance company does not pay more than the limit of insurance that applies, regardless of reported values used to calculate the premium.

Additional Coverage Limitations

1. Occupancy and Use

This section applies to only Builders' Risk Coverages.

2. When Coverage Ceases

This section is changed to add the words installation and installation project throughout in order to recognize the addition of Installation Floater coverage.

Definitions

One definition is added, and one is modified.

Installation project is the definition added.

This is an installation or construction project where the named insured installs, constructs, or rigs materials, supplies, machinery, fixtures, or equipment.

Jobsite is the definition changed.

The definition of jobsite is broadened to include locations where the named insured is engaged in installation, construction, or rigging materials, supplies, machinery, fixtures, or equipment.

IM 7059–SCHEDULE OF COVERAGES–BUILDERS' RISK–REHABILITATION AND RENOVATION (01 12 changes)

This Schedule of Coverages is used with IM 7054–Builders' Risk Coverage–Rehabilitation and Renovation Form. IM 7059 contains the following information:

Policy Number (01 12 addition)

The 01 12 edition added a space to enter the policy number.

Scheduled Jobsite

All covered jobsites must be listed, described, and have a job number and/or jobsite location entered. Coverage does not apply to any premises not listed. IM 7090–Additional Scheduled Jobsite Locations is used to list jobsites that cannot fit on IM 7059 because of space considerations.

Building Materials Limit

This limit applies to materials, supplies, attachments, and fixtures on the jobsite intended to be permanent additions to the existing building being renovated or rehabilitated.

Existing Building Coverage

If coverage is provided on an existing building, a limit must be entered in the space provided. Otherwise, the box for Existing Building Coverage Not Provided must be checked.

Catastrophe Limit

This is the most paid in a single occurrence or loss, regardless of the number of buildings, structures, or jobsites.

Coverage Extensions

The limits on the Schedule of Coverages for the following coverages apply to all covered locations:

Additional Debris Removal Expenses

The limit is $5,000 unless a different limit is entered.

Limited Fungus Coverage

The limit is $15,000 during each 12-month period unless a different limit is entered.

Supplemental Coverages

Each of these coverages provides additional limits of coverage or additional coverage. Required entries vary by type of coverage.

Pollutant Cleanup and Removal

The limit is $10,000 during each 12-month period unless a different limit is entered.

Temporary Storage Locations

The limit is $10,000 unless a different limit is entered.

Transit

The limit is $10,000 unless a different limit is entered.

Deductible

One deductible is entered that applies per occurrence.

Valuation

If coverage on an existing building is provided, either the box for Stated Value or the box for Actual Cash Value must be checked. Building Materials Valuation is always Actual Cash Value.

Coinsurance–Building Materials Only

The coinsurance can be 80%, 90%, 100%, or any other percentage entered. Coinsurance can also be waived.

Vacant Building Limitation

One of the three options in this section must be checked.

Vacant Building Limitation Applies Per Rehabilitation and Renovation Form

When selected, the limitation under Property Covered in the coverage form applies.

Refer to Vacant Building Limitation Endorsement

When selected, IM 7097–Vacant Building Limitation Endorsement must be attached and the number of vacant days increased.

Vacant Building Limitation Waived

When selected, the Vacant Building Limitation under Property Covered in the coverage form does not apply.

Additional Information (01 12 change)

This section of the schedule of coverages lists endorsements and forms included when the policy is issued.

The previous edition referred to this section as Optional Coverages and Endorsements.

IM 7054–BUILDERS' RISK COVERAGE–REHABILITATION AND RENOVATION FORM ANALYSIS

This analysis is of the 08 12 edition.

This coverage form is identical to IM 7050–Builders' Risk Coverage–Scheduled Jobsite Form–Comprehensive Form analyzed earlier except for ten sections. This analysis addresses only the ten sections that are different.

Property Covered

IM 7054 describes property covered completely differently than IM 7050 because the type of work insured is rehabilitating and renovating existing buildings or structures instead of new construction.

1. Coverage

Coverage applies to direct physical loss or damage caused by or that results from a covered peril to building materials and existing buildings, but only those that are part of the named insured's renovation or rehabilitation project.

2. Coverage Limitation

Coverage applies to any existing buildings only when there is a limit for Existing Buildings on the schedule of coverages. Building materials are only covered if intended to be a permanent part of an existing building. The property must be at a jobsite listed on the schedule of coverages for coverage to apply.

3. Vacant Building Limitation

Vacancy is a major concern for any rehabilitation and renovation project. Therefore, this limitation is added. If the building is vacant, coverage ends 60 days following the policy inception date. There are options available to waive this, but only if the schedule of coverages is modified to provide coverage without limitation or increase the number of days.

4. We Do Not Pay

This section is identical in both forms.

Note: Scaffolding, Fencing, and Temporary Structures coverage in IM 7050 is not in IM 7054.

Property Not Covered

One item is added.

3. Excavations, Grading, Filling, Pipes, Flues, and Drains

This property is added as property not covered.

Three items have been changed.

6. Standing Building or Structure

This item is modified to except covered existing buildings.

7. Trees, Shrubs, and Plants

This item does not provide the Supplemental Coverage exception because this coverage form does not have that Supplemental Coverage.

8. Waterborne Property

This item does not provide the Coverage Extension exception because this coverage form does not have that Coverage Extension.

Coverage Extensions

The Coverage Extensions for Emergency Removal, Emergency Removal Expenses, Fraud and Deceit, and Waterborne Property in IM 7050 are not in IM 7054.

Supplemental Coverages

Supplemental Coverages in IM 7050 for Expediting Expenses, Expense to Re-erect Scaffolding, Fire Department Service Charges, Ordinance or Law (Undamaged Parts of a Building), Ordinance or Law (Increased Cost to Repair and Cost to Demolish/Clear Site), Personal Property, Rewards, Sewer Backup, and Trees, Shrubs, and Plants are not in IM 7054.
The only Supplemental Coverages in IM 7054 are Pollutant Cleanup and Removal, Temporary Storage Locations, and Transit.
The Pollutant Cleanup and Removal Limit in IM 7050 is $25,000. It is $10,000 in IM 7054.
The wording in IM 7054 for Temporary Storage Locations and Transit is slightly different than in the corresponding Supplemental Coverage in IM 7050 to reflect the different coverage provided.

Perils Excluded

IM 7054 has five additional exclusions and eight that are changed compared to IM 7050.

The new exclusions are all part of 2. Secondary Exclusions:

Collapse

Coverage does not apply to loss or damage caused by or that results from collapse, other than as Other Coverages–Collapse provides. However, if the collapse results in a covered peril occurring, coverage applies to the damage the covered peril causes.

This exclusion does not apply to property in transit.

Freezing

Loss or damage caused when water, other liquids, powder, or molten material leak from plumbing, heating, or air conditioning systems or appliances freeze is excluded.

There are two exceptions:

The exclusion does not apply to fire protective systems.

If the named insured either maintains heat in the building or drains the equipment and turns off the supply when heat is not maintained, the exclusion does not apply.

Materials And Workmanship

Loss or damage caused by faulty, inadequate, or defective materials or workmanship is excluded. The exception is that when faulty, inadequate, or defective material causes a covered peril, the damage from the covered peril is covered.

Rain, Snow, Ice, or Sleet

Loss or damage to property in the open that is not part of the permanent existing building caused by or that results from rain, snow, ice, or sleet is excluded. There is an exception for property in the custody of carriers for hire.

Settling, Cracking, Shrinking, Bulging, or Expanding

Loss or damage caused by or that result from any of these with respect to pavements, foundations, walls, ceilings, glass, or roofs is excluded. If any of these result in a covered peril, the damage from that covered peril is covered.

The following exclusions are changed:

The Ordinance or Law exclusion in IM 7054 does not have the Supplemental Coverage exception because this coverage form does not have that Supplemental Coverage.
The Sewer, Septic Tank, Sump, or Drain Backup and Water below Surface exclusion in IM 7054 does not have the Supplemental Coverage exception because this coverage form does not have that Supplemental Coverage.
The Contamination or Deterioration exclusion in IM 7054 does not have the resulting covered peril exception that IM 7050 has.
The Defects, Errors, and Omissions in Design or Planning exclusion in IM 7054 replaces the Defects, Errors, and Omissions exclusion in IM 7050. It is more targeted and does not exclude loss or damage caused by or that results from construction materials, workmanship, maintaining, installing, renovating, remodeling, or repairing.
The Delay in Completion and Increased Construction Costs exclusion in IM 7054 is worded slightly differently than in IM 7050 to reflect the different coverage IM 7054 provides, but it is essentially the same.
The Temperature/Humidity exclusion in IM 7054 does not have the resulting covered peril exception that is in the corresponding exclusion in IM 7050.
The Voluntary Parting exclusion in IM 7054 does not have the resulting covered peril exception that is in the corresponding exclusion in IM 7050.
The Wear And Tear exclusion in IM 7054 does not have the resulting covered peril exception that is in the corresponding exclusion in IM 7050.

Other Coverages–Collapse

This coverage in IM 7054 is not in IM 7050 because IM 7050 does not contain a Collapse exclusion and, therefore, does not need to provide this additional coverage. The IM 7054 is, therefore, less broad than what is provided by the IM 7050.

1. Coverage

Coverage applies to direct physical loss or damage caused by or that results from collapse of an existing building that is being renovated or rehabilitated. The existing building, its parts and building materials inside are all covered.

2. Covered Perils

The only collapse losses covered are those caused by specified perils this coverage form insures, hidden decay, insect or vermin damage of which the named insured was unaware, the weight of people or personal property, rain that collects on a roof, or use of defective materials.

3. Collapse Means

Sudden or unexpected falling down or caving in of part or all of an existing building being renovated or rehabilitated is collapse when activities cannot continue or be completed as planned.

4. Collapse Does Not Mean

The following buildings or structures are not treated as being in a state of collapse when:

All or part of the building is standing even though it displays evidence of bending, bulging, cracking, expanding, leaning, sagging, settling, or shrinking
All or part of the building is in danger of falling down or caving in
A part of the building is standing even if separated from another part

5. Limited Fungus Coverage Does Not Increase/Decrease Coverage

Nothing in the Limited Fungus Coverage Extension increases or decreases this coverage.

Valuation

The replacement cost valuation provision in IM 7050 is removed, and the following replaces it.

1. Existing Building

Existing buildings are valued on one of two bases on the schedule of coverages. One or the other must be selected.

a. Stated Value

The valuation is very simple. The limit on the schedule of coverages for the existing building that sustains direct physical loss or damage is its value.

b. Actual Cash Value

The actual cash value at the time of the loss will be used as the valuation.

Note: Actual cash value is commonly defined as replacement cost new less depreciation.

2. Building Materials

a. Actual Cash Value

Building materials are valued based on their actual cash value when the loss occurs.

b. Actual Cash Value Means

Building materials valued on an actual cash value basis means the following:

The reasonable and necessary costs of materials and labor to repair or replace the building materials damaged or that sustain direct physical loss. This includes a deduction for depreciation.
Reasonable overhead and profit related to covered building materials damaged or that sustain direct physical loss up to but not more than the overhead and profit in the construction contracts for the renovation or rehabilitation project
Other related construction costs and expenses incurred a second time to repair or replace damaged building materials, but only if they are included as part of the applicable limit

Note: Only the first item under this valuation is subject to depreciation.

How Much We Pay

Two items in this section are changed.

4. Limits

This item replaces item 4. Catastrophe Limit in IM 7050.

a. Building Materials Limit

The Building Materials Limit on the schedule of coverages is the most paid in a single occurrence for loss or damage to building materials.

b. Existing Building Limit

The Existing Building Limit on the schedule of coverages is the most paid in a single occurrence for loss or damage to an existing building.

c. Catastrophe Limit

The Catastrophe Limit on the schedule of coverages is the most paid for loss or damage in a single occurrence.

5. Coinsurance

Coinsurance applies to only building materials. As a result, that term replaces building or structure in IM 7050 throughout this provision. In addition, the only coinsurance option in IM 7050 is 100%. Because IM 7054 has other options, an additional step is added to the coinsurance calculation. Before starting the calculation, the value must be multiplied by the selected coinsurance percentage. That value can then be used in Step 2.

Additional Coverage Limitations

1. Occupancy and Use

This section in IM 7054 substitutes "an existing building" for "covered building or structure" in IM 7050. This means the existing building cannot be occupied or used without the insurance company’s permission.

2. When Coverage Ceases

This section in IM 7054 substitutes "renovation or rehabilitation project" for "covered building or structure" in
IM 7050. There is also an important change in the number of days. IM 7050 provides coverage for 90 days after construction is completed. IM 7054 provides for only 45 days after rehabilitation or renovation is completed. However, it remains important to recognize that the policy expiration could end coverage before the 45 days are up.

Definitions

The definition of buildings or structures in IM 7050 is not in IM 7054.

IM 7054 has the following three additional definitions:

Building materials

These are materials, supplies, attachments, and fixtures that are destined to become a permanent part of the existing building that is being renovated.

Existing building

The building or structure that existed before this coverage form's inception date and that is to be renovated or rehabilitated. Only the parts intended to be a permanent part of it during and after renovation or rehabilitation are considered existing building. Foundations, attachments, permanent fencing, and other permanent fixtures are all considered existing building.

Renovation or rehabilitation project

The project listed on the schedule of coverages that involves construction, renovation, or rehabilitation of a structure or building.

One definition is changed slightly.

Jobsite in IM 7054 substitutes "renovating or rehabilitating" for "constructing, erecting or fabricating" in IM 7050.

IM 7981–SCHEDULE OF COVERAGES–BUILDERS' RISK–CIVIL WORKS PROJECT (09 15 addition)

This Schedule of Coverages is used with IM 7980–Builders' Risk Coverage–Civil Works Project Form. IM 7981 contains the following information:

Policy Number

Description of the Civil Works Project

The project being covered by this Builders’ Risk Coverage Form must be described, and the location of all jobsites provided. A single limit that applies to the covered civil works project must be entered.

Catastrophe Limit

One of two different catastrophe limits must be selected and a limit entered.

If the project catastrophe limit is selected, the amount paid for loss or damage to the civil works project is capped at the entered limit. If Delay in Completion Coverage has been attached, this limit does not restrict its payment.
If the single catastrophe limit is selected, the amount paid for the sum of loss or damage to the civil works project and Delay in Completion Coverage is capped at the entered limit.

Coverage Extensions

The limits on the Schedule of Coverages for the following coverages apply to all covered locations:

Additional Debris Removal Expenses

The limit is $100,000 unless a different limit is entered.

Emergency Removal

This applies for 365 days

Emergency Removal Expenses

The limit is $50,000 unless a different limit is entered.

Fraud and Deceit

The limit is $100,000 unless a different limit is entered.

Limited Fungus Coverage

The limit is $15,000 during each 12-month period unless a different limit is entered.

Waterborne Property

The limit is $100,000 unless a different limit is entered.

Supplemental Coverages

Each of these coverages provides additional limits of coverage or additional coverage. Required entries vary by type of coverage.

Blueprints and Construction Documents

The limit is $50,000 unless a different limit is entered

Claim Preparation Expense

The limit is $10,000 unless a different limit is entered

Expediting Expenses

The limit is $50,000 unless a different limit is entered.

Expense to Re-Erect Scaffolding

The limit is $50,000 unless a different limit is entered.

Fire Department Service Charges

The limit is $10,000 unless a different limit is entered.

Ordinance or Law (Undamaged Parts of a Building)

The word “Covered” is entered with no other entry available.

Ordinance or Law (Increased Cost to Repair and Cost to Demolish/Clear Site)

The limit is $100,000 unless a different limit is entered.

Personal Property

The limit is $50,000 unless a different limit is entered.

Pollutant Cleanup and Removal

The limit is $25,000 during each 12-month period unless a different limit is entered.

Rewards

The limit is $5,000 unless a different limit is entered.

Sewer Backup

The limit is $50,000 unless a different limit is entered.

Temporary Storage Locations

The limit is $50,000 unless a different limit is entered.

Transit

The limit is $50,000 unless a different limit is entered.

Trees, Shrubs, and Plants

The limit is $50,000 unless a different limit is entered.

Deductible

One deductible is entered that applies per occurrence.

Coinsurance

One of the following boxes must be checked:

100%
Another coinsurance percentage
Coinsurance Provisions Are Waived

Additional Information

This section of the schedule of coverages lists endorsements and forms included when the policy is issued.

IM 7980–BUILDERS' RISK COVERAGE–CIVIL WORKS PROJECT FORM ANALYSIS (09 15 addition)

This coverage form is similarly identical to IM 7050–Builders' Risk Coverage–Scheduled Jobsite Form–Comprehensive Form analyzed above, except for eight sections. This analysis addresses only those sections that are different.

Important wording change used throughout IM 7980.

The term “contact works” is used in place of “buildings or structures” throughout IM 7980. The term is defined in the Definitions section.

Property Covered

Course of Construction

The coverage is for damage to contract works (a defined term) instead of building or structure. Coverage for the contract works only applies if they are part of the civil works project described on the schedule of coverage.

A civil works project that is partially completed and the completed part put to its intended remains covered as in the course of construction until the individual authorized within the construction contract to accept the project has accepted the entire project.

Temporary contract works are also covered in the course of construction. These portions of the contract work are not intended to become part of a permanent part of the project but must be installed as part of the work itself. Examples are scaffolding, fencing, etc., but not trailers of any type.

Coverage Limitation

The coverage limitations are modified only by using the terms contract works and temporary contract works because both remain limited to the jobsites described in the schedule of coverages.

Property Not Covered

Contraband, Trees, Shrubs or Plants and Waterborne Property are the same in both forms. The other four Property Not Covered items are similar but have some significant differences.

Land

All land is excluded in IM 7050, but in IM 7980, only land that is not physically altered according to the contract works is not covered.

Not a Permanent Part of Building or Project

The first part of the item is similar to IM 7050, but an exception is added:

Equipment and machinery designed and acquired specifically for the civil works project but that have no use after the project are covered. This is subject to a requirement that the value of the equipment and machinery must be part of the declared value of the project if it is to be covered.

Roadways and Walkways

The IM 7050 does not cover roadways or walkways more than 1,000 feet from the covered building. This does not apply to the IM 7980. Instead, there is no coverage for any roadways or walkways that will not be a permanent part of the project or are used to facilitate the building of the contract works.

Property Constructed Prior to Inception

(This is similar to Standing Building or Structure)

Buildings, structures, earthen works, facilities, systems, foundations, excavation, grading, pavements, machinery, and equipment are not covered if they existed before the inception date of this policy. This is much more restrictive than merely standing building or structure not covered under IM 7050.

Similar to the IM 7050 the same items above are not covered if they are being rehabbed or renovated.

Coverage Extensions

The extensions are the same in both coverage forms. However, several important increases in limits apply.

Debris Removal

The only difference is that the Additional Limit is increased from $5,000 to $100,000.

Emergency Removal

The only difference is that the number of days coverage is increased from 10 days to 365 days. However, the limitation that the coverage ends on the expiration date of the policy continues.

Emergency Removal Expenses

The time limit is increased from 10 to 30 days, and the expenses are increased from $10,000 to $50,000.

Fraud and Deceit

The limit is increased from $50,000 to $100,000.

Waterborne Property

The limit is increased from $10,000 to $100,000.

Supplemental Coverages

The following Supplemental Coverages are provided in only IM 7980

Blueprints and Construction Documents

The cost of researching and creating blueprints and other construction documents following a covered loss is covered for up to $50,000.

Claim Preparation Expense

The cost the named insured incurs to prepare its claim is covered for up to $10,000. There are restrictions on what are considered claim preparation expenses.

The following Supplemental Coverages are modified

Expediting Expenses

The limit is increased from $10,000 to $50,000, and a limitation that such expenses are only paid if the project had been on time prior to the loss.

Expense to Re-Erect Scaffolding

The limit is increased from $5,000 to $50,000.

Fire Department Service Charges

The limit is increased from $1,000 to $10,000.

Ordinance or Law (Increased Cost to Repair and Cost to Demolish)

The limits are increased from $50,000 to $100,000.

Personal Property

The limit is increased from $10,000 to $50,000.

Rewards

The limit is increased from $1,000 to $5,000.

Sewer Backup

The limit is increased from $10,000 to $50,000

Temporary Storage Locations

The limit is increased from $10,000 to $50,000

Transit

The limit is increased from $10,000 to $50,000

Trees, Shrubs and Plants

The limit is increased from $10,000 to $50,000

Water run off or flood peril applies when flood is provided as a covered peril.

Coverage applies as long as they are at a covered jobsite and a permanent part of the civil works project. No further limitations apply.

Perils Excluded

Delay in Completion and Increased Construction Costs

Project management, site supervision, and security costs are added to the General conditions that are excluded.

How Much We Pay

Catastrophe Limit

This is changed by the introduction of a second type of Catastrophe Limit.

The Project Catastrophe Limit is the same as the Catastrophe limit on the IM 7050 capping the amount of payment over all jobsites and coverages to the Project Catastrophe Limit.

The Single Catastrophe Limit caps the amount of payment over all of the jobsite and coverage AND Delay in Completion to the Single Catastrophe Limit.

Coinsurance

The IM 7050 coinsurance is either 100% or does not apply. The IM 7980 introduces the additional option of coinsurance being less than 100%.

Additional Coverage Limitations

Occupancy and Use

This section does not exist on the IM 7980. However, in the course of construction portion of the Property Covered section, coverage continues to apply after the completed portion of a partially completed project is put to its intended use.

When Coverage Ceases

Item 2. is modified such that coverage does not cease after the purchaser has accepted the project until the named insured no longer has a financial interest in the project.

Definitions

One definition is removed, two are added, and one is modified.

The building or structure definition is removed.

The following two definitions are added:

Civil works project is the project on the schedule of coverage and is the work done in accordance with the construction contract for the project.
Contract Works is a very expansive list. It is the building or structures and also earth works, materials that will be part of the project, systems, and facilities. The foundation, grading, pavement, fencing and other fixtures that are permanent. Any equipment or machinery that is not part of the project but that was designed for the project and has no value after the project is also part of this definition.

Jobsite is the definition changed.

The definition of jobsite is broadened to include locations where the named insured is engaged in installation, construction, or rigging materials, supplies, machinery, fixtures, or equipment within the contract works.

ENDORSEMENTS AND SCHEDULES

AAIS has developed the following endorsements and schedules for use with the various Builders' Risk coverage forms.

IM 7060–Delay in Completion Coverage Part–Green Building Form

IM 7061–Delay in Completion Coverage Part

IM 7062–Delay in Completion Schedule

IM 7063–Permission to Occupy Endorsement (01 12 change)

This endorsement extends coverage by permitting occupancy of the finished part of the building or structure before construction of the entire project is complete. The 01 12 edition added a space to enter the policy number.

IM 7064–Reporting Conditions Endorsement

This endorsement puts a builders' risk coverage form on a reporting basis. IM 7066–Reporting Conditions Schedule–Builders' Risk must also be attached.

IM 7066–Reporting Conditions Schedule–Builders Risk (01 12 changes)

This schedule is used with IM 7064–Reporting Conditions Endorsement. It has spaces to enter the reporting and adjustment periods and the premium adjustment basis, along with the rates that apply and the premium for the coverage involved. The 01 12 edition added a space to enter the policy number. It also added the word “Limit” because Limit is a defined word.

IM 7068–Trees, Shrubs and Plants Endorsement (01 12 change)

This endorsement covers direct physical loss or damage to trees, shrubs, plants, and lawns on a per-occurrence basis at designated jobsites or construction projects caused by or that results from six designated perils. The
01 12 edition added a space to enter the policy number.

IM 7069–Sewer Backup Coverage (01 12 change)

(Use with IM 7051 and IM 7054)

This endorsement covers direct physical loss or damage to covered property caused by water or waterborne material that back up through a sewer, drain, sump, or septic tank. It also covers water below ground level that exerts pressure on or flows, seeps, or leaks through or into the covered property. The 01 12 edition added a space to enter the policy number.

IM 7070–Rehabilitation and Renovation Endorsement (08 12 changes)

This endorsement covers existing buildings or structures for direct physical loss or damage caused by, or that results from a covered peril when the building or structure is being rehabilitated or renovated. The 08 12 edition of this endorsement increases from two pages to four pages and adds a number of significant changes in definitions and limitations that could reduce coverage. A careful review of the endorsement changes is recommended. Because the 08 12 edition removed the Rehabilitation and Renovation Schedule, the newly introduced IM 7970–Rehabilitation and Renovation Schedule must be attached.

IM 7071–Business Personal Property Endorsement (01 12 change)

This endorsement covers business personal property inside a building or structure under construction that is not intended to become a permanent part of the building or structure. The 01 12 edition added a space to enter the policy number.

IM 7072–Ordinance or Law Coverage (01 12 change)

(Use with IM 7051 and IM 7054)

This endorsement provides coverage for the additional loss that results when government regulation is enforced that requires demolishing undamaged parts of the property or establishes use requirements and regulations that apply to the property. It is also used to cover increased costs of construction or reconstruction and any costs to demolish and clear debris from the location or jobsite because of such regulation. The 01 12 edition added a space to enter the policy number.

IM 7073–Contract Penalty Endorsement (01 12 change)

This endorsement covers contractual penalties imposed on the named insured as a result of a covered loss because of a delay in completing an insured construction project within the defined contract terms. The 01 12 edition added a space to enter the policy number.

IM 7075–Expediting Expenses Endorsement (01 12 change)

This endorsement covers costs or expenses incurred to expedite completing a construction project delayed by a covered loss. Costs included are additional labor, overtime labor, transportation, equipment rental, and storage. The 01 12 edition added a space to enter the policy number.

IM 7076–Testing Endorsement (01 12 change)

This endorsement covers direct physical loss or damage to a covered building or structure caused by testing. Testing is defined as evaluating and measuring the performance, stress, pressure, and overload abilities of materials, supplies, machinery, fixtures, and equipment intended to be a permanent part of a covered building or structure under construction. The 01 12 edition added a space to enter the policy number.

IM 7077–Fraud and Deceit Coverage (01 12 change)

This endorsement covers losses when the named insured or others are convinced to part with covered property based on false information. The 01 12 edition added a space to enter the policy number.

IM 7078–Green Building Schedule

Related Article: IM 7091–Green Building Coverage

IM 7079–Delay in Completion Coverage Part–Includes Rental Income and Income Coverage

Related Article: IM 7091–Green Building Coverage

IM 7080–Delay in Completion Schedule–Includes Rental Income and Income Coverage (09 08 change)

IM 7081–Historic Preservation Tax Credit Schedule (01 12 change)

This schedule is used with IM 7961–Historic Preservation Tax Credit Coverage. It lists the coverages and limits, coverage extensions, and Waiver of Certification Requirement (if applicable) that apply. The 01 12 edition added a space to enter the policy number.

IM 7082–Freezing Exclusion

This endorsement excludes the peril of freezing unless the named insured arranges to prevent such losses.

IM 7083–Equipment Breakdown and Testing Coverage

This endorsement provides coverage for loss or damage to covered property due to equipment breakdown and testing. It can be extended to apply to delay in completion coverage. IM 7095–Equipment Breakdown and Testing Schedule must be attached to provide the coverage and limits.

IM 7084–Mortgageholders Endorsement

This endorsement includes mortgage provisions for mortgagees listed on the coverage form. It also includes details on the notice periods for policy cancellation or non-renewal and information on premium payments and loss payments.

IM 7085–Earthquake and Flood Coverage Endorsement (08 12 change)

This endorsement covers the perils of earthquake and flood. The 08 12 edition amends the wording for Earthquake and Volcanic Eruption to more precisely define what the term “earthquake and volcanic eruption” means. This could result in a reduction of coverage. Do not attach when IM 7972–Earth Movement and Flood Coverage Endorsement is attached.

IM 7086–Earthquake and Flood Schedule (01 12 change)

This schedule is used with IM 7086–Earthquake And Flood Endorsement to state the coverages, limits, and deductibles that apply. The 01 12 edition added a space to enter the policy number. It also added the word “Limits” because Limit is a defined word.

IM 7087–Additional Builders' Risk Schedule (01 12 change)

This schedule is used to list additional covered locations when there is not enough space on the schedule of coverages. The 01 12 edition added a space to enter the policy number.

IM 7088–Windstorm Deductible (01 12 change)

This endorsement provides separate deductibles for the perils of Windstorm and Hail. The deductible can be expressed either as a flat amount or as a percentage, using percentages of 1%, 2%, or 5%. The 01 12 edition added a space to enter the policy number.

IM 7090–Additional Scheduled Jobsite Locations–Rehabilitation and Renovation Form (01 12 change)

(Use with IM 7054)

This schedule is used to list and describe additional buildings being rehabilitated or renovated. The 01 12 edition added a space to enter the policy number.

IM 7091–Green Building Coverage

IM 7092–Standing Building or Structure Exclusion

(Use with IM 7052 and IM 7053)

This endorsement excludes coverage for a building or structure partially or completely constructed before the coverage inception date.

IM 7093–Standing Building or Structure Coverage

(Use with IM 7050 and IM 7051)

This endorsement extends coverage to include buildings or structures at the named insured's jobsite under construction when insurance under the coverage form begins.

IM 7094–When Coverage Ceases Endorsement

This endorsement is used to change the number of days that must elapse before coverage ends.

Note: Caution is suggested when using this endorsement. Even though it increases the number of days, coverage ends on the coverage form's expiration date.

IM 7095–Equipment Breakdown and Testing Schedule (01 12 change)

This schedule is used with IM 7083–Equipment Breakdown and Testing Coverage to list the coverages, limits, deductible, and waiting period that apply. The 01 12 edition added a space to enter the policy number.

IM 7096–Additional Delay In Completion Schedule (01 12 change)

This schedule is used with IM 7060–Delay in Completion Coverage Part–Green Building Form, IM 7061–Delay in Completion Coverage Part, and IM 7079–Delay in Completion Coverage Part–Includes Rental Income and Income Coverage to list jobsite locations, coverages, and limits. The 01 12 edition added a space to enter the policy number.

IM 7097–Vacant Building Limitation Endorsement (01 12 changes)

(Use with IM 7054)

This endorsement replaces the Vacant Building Limitation under Property Covered and changes the number of consecutive days an existing building can be vacant. The 01 12 edition added a space to enter the policy number and clarifying wording that does not affect coverage.

IM 7098–Alternate Coinsurance Percentage (01 12 change)

(Use with IM 7050, IM 7051, and IM 7054)

This endorsement is used to change the 100% coinsurance percentage to a different percentage. The 01 12 edition added a space to enter the policy number.

IM 7099–Delay in Completion Schedule–Green Building Form

IM 7961–Historic Preservation Tax Credit Coverage

(Use with IM 7054)

This endorsement provides coverage for the delay in receiving the tax credit the federal government offers as an incentive to support rehabilitating historic and older buildings. It also covers the loss of the tax credit. The loss must be caused by the occurrence of a covered loss caused by a covered peril. IM 7081–Historic Preservation Tax Credit Schedule must be attached when this endorsement is used.

IM 7962–Testing Endorsement–Builders' Risk and Installation Floater Form (01 12 change)

(Use with IM 7053)

IM 7963–Replacement Cost Endorsement–Building Materials

(Use with IM 7054)

This endorsement changes the valuation provision for building materials from actual cash value to replacement cost as the endorsement defines it.

IM 7964–Blueprints and Construction Documents Coverage (01 12 change)

This endorsement covers plans, blueprints, drawings, and models. The 01 12 edition added a space to enter the policy number.

IM 7965–Claim Preparation Expense Coverage (01 12 change)

This endorsement covers the costs to prepare a claim due to a covered loss. The 01 12 edition added a space to enter the policy number.

IM 7966–Interior Water Damage Limitation (01 12 change)

This endorsement provides limited coverage for loss or damage to the interior of covered building caused by or that results from rain, snow, sleet, or ice that enters the interior of the building. The 01 12 edition added a space to enter the policy number.

IM 7967–Suspension of Construction–Termination of Coverage (09 11 addition)

This endorsement results in builders’ risk coverage ending when construction is suspended for more than the number of days on the endorsement schedule if the insurance company has not given permission for the suspension.

IM 7968–Suspension of Construction–Coverage Limitation (09 11 addition)

This endorsement is similar to IM 7967 except that, instead of completely terminating coverage, coverage is merely limited when construction has been suspended. Loss or damage caused by certain perils is excluded. However, there is partial coverage for loss or damage caused by other perils.

IM 7969–Permission to Suspend Construction (10 11 addition)

This endorsement can be used only when IM 7967 is attached. It provides permission to suspend construction but only within the dates entered on the endorsement schedule.

IM 7970–Rehabilitation and Renovation Schedule (08 12 addition)

This schedule is used with IM 7070–Rehabilitation and Renovation Endorsement to enter the covered jobsite number, limits, deductibles, and coinsurance percentage. It also has provisions to add a vacant building limitation, if desired.

IM 7972–Earth Movement and Flood Coverage Endorsement (08 12 addition)

This endorsement adds coverage for earth movement and flood. It should not be attached when IM 7085–Earthquake and Flood Coverage Endorsement is attached. This endorsement is much broader than
IM 7085 because it covers all defined earth movement, not just earthquake and volcanic eruption. In addition, IM 7976–Earth Movement and Flood Schedule must be attached to list limits and coverages.

IM 7973–Model Homes and Sales Offices Coverage (08 12 addition)

This endorsement provides coverage on model homes and sales offices scheduled on IM 7974 and that are situated on the named insured’s jobsite.

IM 7974–Model Homes and Sales Offices Schedule (08 12 addition)

This schedule is used with IM 7973 to enter the limits for the selected coverage and deductible that applies to model homes and sales offices.

IM 7975–Contract Change Order Coverage (08 12 addition)

This endorsement provides a scheduled additional limit of insurance for increases in the project’s value because of increases in construction costs due to specification changes or escalation clauses in the construction contract.

IM 7976–Earth Movement and Flood Schedule (08 12 addition)

This endorsement is used with IM7972–Earth Movement and Flood Coverage Endorsement to enter the coverage(s), limit(s), and deductible(s) that apply.

IM 7977–Theft Deductible Endorsement (08 12 addition)

This endorsement replaces the deductible on the schedule of coverages. It is used to provide one deductible for theft and another for all other perils. The theft deductible applies to theft and attempted theft of all building materials, or it can be limited to only theft or attempted theft of materials with copper or any other type of precious metals.

IM 7978–Theft Exclusion (08 12 addition)

This theft exclusion can apply to all building materials or be limited to only materials with any other precious metal.

IM 7982–Delay in Completion Coverage Part – Civil Works Project (10 15 addition)

(Use with IM 7980)

When a project’s completion is delayed by a covered loss, this endorsement provides coverage for the additional construction expenses and the additional soft costs that must be paid.

IM 7983-Delay in Complete Schedule – Civil Works Project (09 15 addition)

(Use with IM 7980)

This schedule must be attached when the IM 7982–Delay in Completion Coverage Part – Civil Works Project is attached because it provides the limits.

IM 7984-Equipment Breakdown and Testing Coverage – Civil Works Project (09 15 addition)

(Use with IM 7980)

Equipment breakdown coverage is provided when this endorsement is attached.

IM 7985–Equipment Breakdown and Testing Schedule – Civil Works Project (09 15 addition)

(Use with IM 7980)

This schedule must be attached when IM 7984-Equipment Breakdown and Testing Coverage – Civil Works Project is attached.

IM 7986–Contract Penalty Endorsement – Civil Works Project (09 15 addition)

(Use with IM 7980)

Coverage for assessed contractual penalties due when a project is delayed due to a covered loss is added with this endorsement.

IM 7987–Trailers Coverage Endorsement – Civil Works Project (09 15 addition)

(Use with IM 7980)

There is no coverage in the IM 7980 for damage to construction trailers. This endorsement adds that coverage subject to the limits entered on the endorsement.

IM 7988–Earthquake, Earth Movement, and Flood Coverage Endorsement – Civil Works Project (09 15 addition)

Coverage can be selected for earthquake or earth movement. Coverage can also be selected for flood. Any selection can be expanded to include delay in completion. It is important to note that the very broad earth movement peril is available, which is much broader than only earthquake.

(Use with IM 7980)

IM 7989–Earthquake, Earth Movement, and Flood Schedule – Civil Works Project (09 15 addition)

(Use with IM 7980)

This schedule must be attached when IM 7989–Earthquake, Earth Movement, and Flood Schedule – Civil Works Project coverage is provided.

IM 7990–Additional Civil Works Project Schedule (09 15 addition)

(Use with IM 7980)

Only the described civil works projects and the jobsites associated with those projects are covered. This endorsement is used to describe those that cannot fit on the schedule of coverages.

IM 7991–Additional Delay in Completion Schedule – Civil Works Project (09 15 addition)

(Use with IM 7980)

When Delay of Completion coverage is provided at more than one jobsite, this endorsement is attached to schedule the needed information.

UNDERWRITING CONSIDERATIONS

Builders' risk and installation coverage forms cover building materials and supplies at the construction site, in transit to the site, and similar property intended for the construction project at other locations as necessary or because of lack of storage space at the construction site. The principal exposures and causes of loss are fire, theft, vandalism, windstorm, collapse, and transit. The underwriting process involves evaluating the location and transit exposures and the protective services and arrangements incorporated at the project to eliminate or reduce the possibility of loss.

The most important element in underwriting builders' risk insurance is the type of contractor involved. The contractor should have experience in building the type of structure being considered. A residential contractor may be very successful building one and two family homes, but that does not mean it will be similarly successful in building a six-family condominium building or some other kind of commercial property. Similarly, a commercial building contractor may not be aware of all the aspects and pitfalls involved in residential construction. Simply being a contractor is not sufficient. A good contractor is aware of all aspects and hazards of a particular job and takes the appropriate steps to address them all, both in advance planning and as they come up during the course of the construction project.

Another major issue is job site supervision. Some contractors are "paper contractors." These contractors bring together the various subcontractors to handle the job but do not regularly have any of their own employees on the job site. In situations like these, relationships are extremely important. A good "paper contractor" (to the extent possible) uses the same subcontractors on as many jobs as possible. This makes it more likely that the different crews will work well together. The contractor should have a detailed checklist and an established timetable for checking the work. The general contractor is usually responsible for all functional aspects at the job site and should be aware of all elements of job site safety and the normal arrangements that should apply.

The number of jobs being worked on at the same time is also important. If there are multiple job sites, the contractor should have regular, sufficient supervision at all sites. Job sites not visited regularly by the contractor with authority can quickly become disorderly and fall behind schedule. Inferior workmanship in plumbing, electrical, and framing is quickly covered up and hidden if it is not observed regularly and frequently.

If the building being constructed is in areas subject to high winds, the walls should be properly shored up and braced before the roof is added to reduce or eliminate the chance of wind losses. Any other similar atmospheric or geographic issues that can affect construction must be evaluated and adequate protection or needed safeguards implemented to reduce loss potential.

Written contracts and agreements are as important in the construction field as they are anywhere else. Contracts should be in place to establish ownership and responsibility and to reduce the chances of ambiguity and disagreement if a loss occurs. Ownership of building materials must be established since the contractor, in many cases, simply installs the goods and does not actually own them during the construction or installation process.

The nature and details of the transit exposure should be analyzed and understood by all affected parties. “Paper contractors” usually have little or no exposure in this area. Workers’ tools, scaffolding, and related equipment are frequently overlooked but are subject to transit exposures and losses as much as building materials. Some of these items should be insured under contractors' equipment coverage and others under builders' risk coverage. It is important to review all of the above to set the appropriate transit limit for the exposed values.

The type of construction is a major factor in both underwriting and rating. Construction methods vary greatly, as do wind and fire exposures. Frame construction is the most common type of construction and is most subject to wind and fire losses. Brick veneer construction does not reduce loss potential of a frame building because it is simply a layer of masonry veneer attached to the wood frame, and the basic construction is still frame. Solid brick or masonry bearing walls construction stand up better to wind and fire but require longer construction time, and damage can be more expensive to repair. Metal buildings are similar to frame with respect to the wind exposure. Metal building construction is vulnerable to several issues until the roof is securely attached, but fire is not ordinarily one of them. Masonry-non-combustible and fire-resistive are the best types of construction, but using these materials takes more time and is considerably more expensive.

Any type of construction has its own issues that relate to job site security against vandalism and theft. The more involved, elaborate, and expensive types of construction require using a variety of heavier equipment, and this element affects the job site security issue more than anything else does. As a result, these job sites require more security measures than those of lesser quality and that have less equipment on the site, whether occupied and operating or not.

It is important to understand the financial interests of all the parties in the property under construction and any contractual obligations they have to one another. The worse case scenario is where each party believes the other is responsible for purchasing the builders’ risk coverage, and nobody purchases it at all. If more than one policy is purchased, the only damage done is the amount of extra premium paid. If nobody arranges for coverage, it means the entire project is unprotected.

The coverage form to be used must be considered since reporting forms are available in addition to scheduled and non-reporting forms. Each approach has advantages, disadvantages, and responsibilities that must be understood. Reporting forms are flexible and lead to a greater feeling of security, but improper or inadequate reporting can diminish those advantages and spell disaster in the event of a loss.

Editor's Note: The coverages IM 7050–Builders' Risk Coverage–Scheduled Jobsite Form–Comprehensive Form provides are included in IM 8000–Contractor's Combination Form–Scheduled Coverage. It combines the coverages provided by four separate coverage forms into a single combination coverage form. The other three forms are IM 7000–Contractors' Equipment Coverage, IM 7203–Business Computer Coverage and IM 7100–Installation Floater Coverage.

IM 8000 is not analyzed because the coverages provided are analyzed under the other coverage forms indicated in addition to the analysis of IM 7050.

AAIS Contractors' Equipment Coverage Forms

AAIS Electronic Data Processing Equipment and Business Computer Coverage Forms

AAIS Installation Floater Coverage Forms

AAIS BUILDERS' RISK COVERAGE FORMS ANALYSIS

INTRODUCTION

ELIGIBILITY

POLICY CONSTRUCTION

SCHEDULES OF COVERAGES

IM 7055–SCHEDULE OF COVERAGES–BUILDERS' RISK COMPREHENSIVE FORM (01 12 changes)

Policy Number (01 12 addition)

Scheduled Jobsites

Catastrophe Limit

Coverage Extensions

Supplemental Coverages

Deductible

Coinsurance

Permission to Occupy

Additional Information (01 12 change)

IM 7050–BUILDERS' RISK COVERAGE–SCHEDULED JOBSITE FORM–COMPREHENSIVE FORM ANALYSIS

Introduction

Agreement

Property Covered

1. Coverage

2. Scaffolding, Fencing, and Temporary Structures

3. Coverage Limitation

4. We Do Not Pay

a. Penalties

Property Not Covered

1. Contraband

2. Land

3. Not a Permanent Part of Building

4. Roadways and Walkways (08 12 change)

5. Standing Building or Structure

6. Trees, Shrubs, or Plants

7. Waterborne Property

Coverage Extensions

Provisions That Apply To Coverage Extensions

1. Debris Removal

2. Emergency Removal

3. Emergency Removal Expenses

4. Fraud and Deceit

5. Limited Fungus Coverage

6. Waterborne Property

Supplemental Coverages

Provisions That Apply To Supplemental Coverages

1. Expediting Expenses (08 12 words added)

2. Expense to Re-erect Scaffolding

3. Fire Department Service Charges (08 12 changes)

4. Ordinance or Law (Undamaged Parts of a Building)

5. Ordinance or Law (Increased Cost to Repair and Cost to Demolish/Clear Site) (08 12 changes)

6. Personal Property

7. Pollutant Cleanup and Removal

8. Rewards

9. Sewer Backup

10. Temporary Storage Locations

11. Transit

12. Trees, Shrubs, and Plants (08 12 changes)

Perils Covered

Perils Excluded

1. Primary Exclusions (08 12 changes)

2. Secondary Exclusions

What Must Be Done In Case Of Loss

Valuation

How Much We Pay

Loss Payment

Other Conditions

Additional Coverage Limitations

Definitions

IM 7056–SCHEDULE OF COVERAGES–BUILDERS' RISK (01 12 changes)

Policy Number (01 12 addition)

Scheduled Jobsites

Catastrophe Limit

Coverage Extensions

Supplemental Coverages

Deductible

Coinsurance

Additional Information (01 12 change)

IM 7051–BUILDERS' RISK COVERAGE–SCHEDULED JOBSITE FORM COVERAGE FORM ANALYSIS

Property Not Covered

Coverage Extensions

Supplemental Coverages

Perils Excluded

Additional Coverage Limitations

5. Ordinance or Law (Increased Cost to Repair and Cost to Demolish/Clear Site)
(08 12 changes)