RiskProNet News


If Property Is Stored on a Construction Site …

Considerations in insuring the property of others range from special coverage of artwork to deductible buy-downs. These were among the topics at the recent Construction Practice Group teleconference led by Sonya Moore of Eustis Insurance and Benefits.

Renovations and expansions. A builders risk policy may be unnecessary for renovation and expansion projects. However, it is worthwhile to consider increasing the value of the building coverage. If coverage includes time elements or soft costs, also consider including the general contractor and subcontractors as named insureds.

Theft of building materials. Be aware that ISO property forms do not cover theft of building materials and supplies before they are attached to the structure. Builders risk coverage, in contrast, can protect property in transit en route to storage or construction sites.

Protecting subcontractors’ interests. Subcontractors should be alert to the fact that even though there is a single builders risk policy, their interests may not be protected adequately. “Subcontractors are often better off buying their own installation floaters,” one person suggested, as it can be difficult for a subcontractor to even get a copy of the general contractor’s policy. “This allows subcontractors to file their own claims if necessary.”

Premium increases for owner’s property. Contracts should spell out who is responsible for insurance and any premium increases if the owner stores property on the site before the building is completed. One RiskProNet member recalled getting a telephone call from a client saying that more than a thousand mattresses for a hotel were about to arrive and needed to be stored at the site.

Deductible buy-downs. Insurance for deductible buy-downs is available, and may be advisable if the deductible is in the $50,000 to $100,000 range. “Use a specialist in the area of ocean/inland marine insurance, not your standard underwriter,” one conference call participant advised.

Artwork & historical artifacts. Builders risk and installation floater policies often exclude items such as historical building materials and artwork. Consider a separate policy for these.

Soft costs. Clients should insure at least 15 percent of the soft costs on a construction project, although it is sometimes hard to persuade them to do so.

See the previous post on insuring the property of others for additional considerations.