Chapter 12 Flashcards
Explain permissions clause
Grants the insured the authority to proceed with additions, alterations, or repairs as required without having to inform the insurer in advance and obtain specific permission in each case
Explain COPE
C- construction usually includes a description of the type of material used in the walls and the roof of the application building and size of the building, its age and the number of stories and the type of heating system and fuel among other factors
O-occupancy refers to the use of the property
P-protection includes both public and private fire protection and any security systems the insured has in place
E-exposure refers to the chance that the insured will suffer loss as a result of the proximity to one or more of the risks or potential causes of loss
How does C from COPE relate to the issues particular to builders risk?
Residential subdivisions under construction are highly susceptible to fire losses
Soil conditions and proximity to water will affect excavation for foundations and can increase potential for flood, sewer back up, or overland water losses
How does O from COPE relate to the issues particular to builders risk?
Occupancy of the building impacts the style of construction in the types of materials used in the building risk
How does P from COPE relate to the issues particular to builders risk?
Adequate water supply during construction
Construction sites are an attractive nuisance in any neighbourhood
Partially completed buildings are temptation for vandalism or damage or set a fire
Building materials and equipment out in the open offer a strong temptation to thieves
How does E from COPE relate to the issues particular to builders risk?
The proximity of adjacent buildings increases the probability of damaging other structures when demolishing existing buildings or while erecting new ones
What is the policy term for builders risk?
Match to the projected length of the job plus an allowance for delays
Define attractive nuisance
A legal tort doctrine that holds that any person who has or creates any condition on her premises, private, or public that may be considered to pose a danger to children at the same time attract them has a duty to take precautions as a reasonable person would do to prevent injury to minors of tender years
What are general exclusions in builders risk?
Collapsed
Rip and tear
Bylaws
Generally can be added via amendment or endorsement, higher premium and deductible
Explain collapse
-Often results from faulty design, defective material, or workmanship
-any resulting damage is covered unless otherwise excluded
-Other wordings exclude all damage arising from collapse unless fire or explosion ensures and then will cover resultant damage
Explain Rip and tear
-Removing a defective project from a project
-it guaranteed the contractors work but it is generally no longer available due to the high incidence of claims
-intermediary to advise client they may be ultimately responsible for the cost of correcting faulty workmanship
Explain bylaws
-Generally excluded means no cover for increased cost due to the operation of any bylaw or ordinance that makes it impossible to repair or build the property as it was immediately before the loss
-The older the structure the higher the chance the building bylaws have been amended since it’s construction
-Bylaws insurance can be relevant when considering a large project that will take a long time to complete
Explain blanket builders risk insurance
For clients specializing in construction risks it will be on a reporting basis instead of arranging separate policies for each project
What are advantages to wrap up liability?
All parties and claims are insured on one policy
Coverage is uniform
Policy limits are dedicated to the project
Loss history is insulated
Cost can be control
