Builder’s Risk insurance can be a confusing topic. Should the General Contractor purchase the policy? Should the owner? Should the contractor have a master builder’s risk program? Are single project policies best? Not every situation is going to have the same answer.
More often than not it is the Owner not the General Contractor dictating who is to procure the Builder’s Risk policy. One of the best ways for a General Contractor to maintain as much control in this process as they can, is to have a Master Builder’s Risk Program. A master program allows rates and terms to be determined at the beginning of a policy period so long as the project fits into a predetermined set of specifications. At that point the Contractor and Owner can compare and see which program best fits the specific job.
The builders risk insurance market is changing all the time and a Master Builder’s Risk Program allows a contractor to have a known commodity at the beginning of the term. Right now non-weather related water damage is causing as much angst as anything for insurers. AXA XL states that about one-third of builders risk losses are coming from water damage. Most of these water claims are coming from faulty workmanship. In addition claim payments from insurers are increasing as well from rising material costs and a competitive market which has suppressed deductibles.
If a General Contractor procures a Master Builder’s Risk Program and is able to complete projects without incident they will build a comfort level with their insurer and stay ahead of whatever market trends might cause deductibles and or pricing to increase. Most of these programs will require a minimum premium or minimum number of jobs placed through the program. For larger General Contractors this is not typically a problem.
A General Contractor having a known commodity in a Master Builder’s Risk Program allows for ease of use and competitive terms on most projects and builds a relationship that will be beneficial in negotiating renewal terms down the road. There is no one-size-fits-all for builders risk insurance because some insurers are going to be more competitive in terms and pricing based on the size and scope of the individual project but at least we can address the needs of most of the projects ahead of time.
About the Author:
Joey graduated from Christopher Newport University in 2007 and began working in the insurance industry that summer. Prior to joining MMA, Joey worked as an underwriter in the middle market at Travelers and The Hartford. Throughout his time in underwriting, he worked with a variety of customers in many industries to help provide programs tailored to their needs. Many of the accounts he worked on were larger real estate firms often with development operations. Throughout his career, he has maintained an approach of effective communication all the while putting his clients first. In 2019, Joey joined Marsh & McLennan Agency, known locally as Insurance Associates, and he will be taking on the role of Account Executive. As an Account Executive Joey will be responsible for managing account relationships in all aspects and making sure clients have a premier insurance programs suited to fit their needs. Joey is married with three children. When not focused on work, he enjoys playing golf, watching the Nationals, and playing with his children.