This Week's Risk Management Quiz

Question 1: Coverage under a typical Builder's Risk policy form ceases when the Named Insured's financial interest ceases. True or False?

Question 2: Which of the following points (and there is only one) is NOT true of a Builder's Risk policy.

1) Builder's Risk policies are usually written on a "project specific" basis.

2) Builder's Risk policies are written on an ARBR (All Risk Builder's Risk) basis.

3) Builder's Risk policies generally include coverage for contract liquidated damages.

4) Builder's Risk policies generally recognize that both the owner and the contractor have an "insurable interest" in the project.

(Try to answer first without clicking below or your computer will explode.)

 Answer to Question #1                        Answer to Question #2

Answer #1

True. Typically, under the standard Builder's Risk form, it also ceases when the structure is accepted as complete by the purchaser, the building is abandoned with no intention that it be completed, the structure is substantially completed and put to its intended use, or the structure is leased to others...unless the insurer agrees to continue coverage in writing.

Ready for Question #2?

Answer #2

Statement #3 is false. Liquidated damages coverage is not part of the standard Builder's Risk policy form and care should be taken with the issue of what happens to coverage in the event the project is not continued or completed because of lack of financing.

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