Construction Risk - Powerpoint Flashcards
What is a Builder’s Risk policy?
A policy that insures against “all risks of direct physical loss or damage.”
What kind of perils does a Builder’s Risk policy protect against?
- Fire
- Lightning
- Explosion
- Impact by aircraft or vehicles
- Riot, vandalism, and malicious acts
- windstorm, hail and rain
- burglary
- subsidence
- collapse
What perils are excluded in a Builder’s Risk policy?
- The cost of making good faulty or improper materials, improper work/construction, faulty design
- mechancial or electrical breakdown
- power surges that damage appliances
- dishonesty of employees
- inventory shortage
- wear and tear
- frost and freezing
When does the period of Builder’s Risk insurance start and end?
- Usually starts at the beginning of construction operations
- For projects like office buildings, it usually ends when there is substantial completion and owner’s permanent insurance kicks in
- For projects like mechanical or industrial projects, it usually ends when testing is complete and start-up achieved
Who should be insured in a Builder’s Risk policy?
Should cover all participants
What is the deductible range in most “all risk” policies?
from $500 to $50,000
usually 1% of contract price
What is the decutible for floods and earthquakes usually?
Around 5 to 10% of completed value
Which factors should be considered in addition to the contract price when determining the “full completed value”?
- Increased costs of replacing and finishing undamaged portions brought about-by delay, wage increases and inflation
- Demolition and debris removal costs such as tearing down a weakened structure before rebuilding
- Earth and rock fill that may be washed away due to flooding or excessive rainfall
- Value of owner-supplied labour, material and equipment
- Architectural and project management fees
- Existing buildings and structures belonging to the owner which are to be added to, reconstructed or repaired
- Temporary facilities that will not be re-used
What is Commerical General Liability Insurance?
It means to pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as compensatory damages because of bodily injury including death. .. and injury to or destruction of tangible property
It is provided by each participant in the project or through a wrap up policy.
Who is named as the Insured in a Commercial General Liability policy?
Where the wrap-up approach is used, policies include all parties involved in the project
How are wrap-up programs advantageous?
They usually provide broad uniform coverage, eliminate inter-insurer disputes and reduce administrative costs
What exclusions are usual in a Commercial General Liability Insurance policy?
The policy usually excludes damage to:
- Work completed by or for the named insured out of which the occurrence arises
- Property in the care, custody or control of the insured
- Property damaged as the result of work being performed on it.
What was developed to overcome the difficulties with the exclusions of Commercial General Liability Insurance?
Broad Form Property Damage coverage
What is the difference between Commercial General Liability Insurance and a Builders All Risk policy?
General Liability Insurance covers third party property and third party bodily injury
Builders All Risk covers damage to project during construction phase
What is Completed Operations and Products Liability Insurance?
Insurance that covers claims arising after a project has been completed and turned over to the owner
