Builder's Risk Coverage - New Underwriting Guidelines
At the November 2006 Board meeting, the OSBIE Board of Directors approved NEW underwriting guidelines for the provision of Builders Risk Insurance to Member Boards. We are advising you of this upcoming change well ahead of the implementation date to give you the necessary time to phase out any outstanding contracts prior to the implementation of this new process.
The following guidelines will take place effective April 1, 2007.
- Premium will be charged on all projects based on .03¢ per $100 value. The premium charged is very modest compared to that of the regular market.
- Administration fee/minimum premium of $1,000 for all projects.
- Maximum limit of construction value that OSBIE would retain is $20 million. OSBIE could place business in excess of $20 million with a reinsurer and member board would be charged premium according to best available market value.
- The deductible would be as requested in the construction contract but no lower than the board's property deductible.
- OSBIE will accept risk on ONLY new construction and additions to existing buildings. Where the contract is substantially for an addition, but there is related renovation or retrofit work, we would also include this associated work in the Builders Risk coverage. For the renovation or retrofit work to qualify for coverage, the same contractor who performs the addition work would also be the contractor in charge of the renovation or retrofit work.
- Retrofit, repair and maintenance work without being associated with a contract which is substantially for an addition, will no longer be eligible for builder's risk coverage through OSBIE i.e., roof replacement, window replacement, HVAC or electrical upgrades, interior retrofits. In these cases, the general contractor's commercial general liability would be called upon to respond should the contractor be found negligent.
- Endorsement date will follow that of the construction contract. If the substantial completion date is extended or if terms of the construction contract have substantially changed from that of the original contract, the amended contract must be provided and reviewed by OSBIE forthwith and future premium may be assessed accordingly.
If there are any questions about the coverage provided, or about reporting, please contact the OSBIE office at 800-668-6724