SPECIALTY LINES · 6 MIN READ

Builders Risk, Equipment Breakdown, and Construction

Builders risk insures a building project during construction and comes in two premium architectures. The Completed Value form insures the full anticipated completed value from inception, automatically satisfying coinsurance with a provisional premium. The Reporting Form instead requires periodic - usually monthly - reports of values in place, enforced by the Honesty Clause (Full Reporting Clause): if the insured under-reports, loss recovery is reduced by the ratio of the last reported value to the actual value, like a coinsurance penalty. Reporting $800,000 when $1,000,000 was at risk caps recovery at 80 percent of the loss - a $400,000 loss pays $320,000. Coverage terminates at defined triggers such as owner acceptance or occupancy, with the Permission to Occupy endorsement (CP 11 32) preserving coverage during early occupancy, a Soft Costs endorsement (CP 11 31) adding delay-driven expenses like extra interest and fees, and Delay in Opening coverage responding to lost income from a covered delay. Defective workmanship is handled by the tiered London Engineering Group wordings. LEG 1 excludes all loss from defects. LEG 2 excludes the cost to repair the defective part itself but covers resulting damage to surrounding work. LEG 3 is broadest: it excludes only the improvement cost - what doing it right originally would have cost - and covers both the defective part and all resulting damage. Hot-work permit warranties condition coverage on fire-safe welding procedures. Construction programs also use wrap-ups - OCIP (owner-controlled) and CCIP (contractor-controlled) consolidated insurance programs covering all enrolled contractors - and Subcontractor Default Insurance (SDI), a first-party product indemnifying the general contractor for subcontractor default, in contrast to a performance bond, a three-party surety instrument protecting the obligee. Equipment breakdown (ISO CP 14 30) fills a deliberate gap: standard causes-of-loss forms exclude mechanical and electrical breakdown. The form defines covered objects in three categories - pressure and vacuum equipment (boilers, pressure vessels), mechanical equipment (compressors, pumps, engines, turbines), and electrical equipment (switchgear, motors, transformers). Ancillary coverages include expediting expenses, spoilage of perishables, data restoration, ammonia contamination, hazardous substance cleanup, and off-premises service interruption from utility failure. Insurer inspections often double as jurisdictionally required boiler inspections.