As an insurance broker, you typically deal with insurance agents who field questions from customers about various insurance policies. Most of their customers will want to know about the different types of coverages they provide. Therefore, you should arm your agents with the information they need to answer their customer’s concerns and address their reluctance to purchase insurance.
Part of your responsibility involves giving your insurance agents information on builder’s risk insurance NY. Most customers probably already have some type of home insurance or personal liability coverage. But most may be unfamiliar with builder’s risk. The information you provide will go a long way in helping your insurance agents deal with the obstacles to selling builder’s risk.
For insurance agents, one of the most significant challenges to selling builder’s risk is overcoming their customers’ unfamiliarity with this particular type of insurance. While home insurance and personal liability are easy enough for most people to understand, builder’s risk is a bit of a grey area.
Many property owners and builders think that their existing insurance will be enough to cover potential loss or damage that may occur during a construction project. But this isn’t always the case. As an insurance broker, your role is to help communicate the importance of builder’s risk to your agents so they can pass this information on to their clients.
Keep in mind that customers are always looking to save money on insurance. Many will be reluctant to pay an additional premium for builder’s risk if they already have some other type of coverage. Your insurance agents should therefore be able to answer the following questions and concerns from their customers:
“Doesn’t permanent property insurance provide adequate coverage?”
Most property owners and builders who have permanent property insurance think that they are sufficiently covered for any loss or damage that may occur during a construction project. But this isn’t always the case.
For instance, permanent property insurance seldom covers the cost of building materials lost or stolen from the building site. Furthermore, this type of insurance doesn’t cover materials being transported to the covered location.
Permanent property insurance also doesn’t usually cover debris removal or property in locations other than the one listed in the policy. And if any of these assets are included in the policy, the coverage amount may not be sufficient.
“Shouldn’t the builder/property owner be responsible for builder’s risk insurance?”
Depending on the terms of the contract, the builder may not be responsible for carrying builder’s risk insurance. If the builder does agree to shoulder the cost and assume the responsibility of coverage, the property owner doesn’t have to get another policy.
That being said, it is often better for property owners to have builder’s risk insurance in their name. If there is a dispute between the two parties, the property owner may not have the necessary coverage if the builder with the insurance walks away from the project. Property owners can avoid this scenario by getting builder’s risk under their name.
“Can’t I purchase builder’s risk coverage when the construction project is underway?”
Many builders and property owners hold off on purchasing builder’s risk insurance, thinking they can do so when the construction is underway. But there are many reasons why it would be beneficial to purchase builder’s risk before breaking ground on a project.
Insurance providers are generally reluctant to cover projects that have already begun. If the builder and property owners are uncertain about who should get insurance, shopping around and applying for insurance could delay the project by weeks. It is always best to decide who will sign up for builder’s risk and get it as early as possible before the project starts.
“Do I really need builder’s risk insurance for this particular project?”
Some contractors feel that builder’s risk insurance is unnecessary because of the limited scope of their role or responsibility in a particular project. But not all construction projects are covered by builder’s risk, as illustrated by the scenarios described above.
There are also situations wherein the existing builder’s risk policy doesn’t apply to the contractors’ job, as in the case of materials being transported to the job site or installation work that is to be done in an existing building. Given these possibilities, it would be best for the contractor in question to find out whether builder’s risk insurance is necessary and, if it is, to get it as soon as possible.
Selling insurance is rarely ever easy. And when it involves dealing with insurance coverage that most people are unfamiliar with, the difficulty may increase considerably. With the information provided above, you should be able to help your insurance agents communicate the importance of builder’s risk insurance to their customers.
About Snyder Specialty
Snyder Specialty, LLC is a New York-based underwriting facility that provides a range of property and liability solutions for personal and commercial lines. Specializing in coastal properties and hard-to-place risks, Snyder Specialty expands your current capabilities with proven solutions for complex risks. Find out more about the company’s range of services by calling (718) 362-8039.
