CP 11 15-Builders Risk-Separate Or Sub-Contractors Coverage And CP 11 14-Builders Risk-Separate Or Sub-Contractors Exclusion

CP 11 15–BUILDERS RISK–SEPARATE OR SUB-CONTRACTORS COVERAGE AND CP 11 14–BUILDERS RISK–SEPARATE OR SUB-CONTRACTORS EXCLUSION

(June 2019)

 

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INTRODUCTION

The Insurance Services Office (ISO) CP 11 15–Builders Risk–Separate or Sub-contractors Coverage and CP 11 14–Builders Risk–Separate or Sub-contractors Exclusion provide a way for the named insured to purchase only the builders risk coverage and limits that it needs. Both endorsements restrict coverage but dovetail with one another. One restricts coverage to an installation by a specific contractor. The other insures all covered property except for a specific installation by a specific contractor. When properly used, these endorsements can customize coverage precisely and eliminate duplicate coverage and premium charges.

CP 11 15–BUILDERS RISK–SEPARATE OR SUB-CONTRACTORS COVERAGE

This endorsement limits coverage to only a specific installation by a specific sub-contractor. The specific premises and building, the contractor's name, and the type of installation must be entered in the appropriate spaces on the endorsement schedule. Multiple entries can be made, and more than one contractor and/or installation can be listed. This is a significant restriction of coverage! As a result, the entries on the schedule are very important and must be thoroughly explained to the named insured, considered carefully, reviewed periodically, and revised as necessary.

This endorsement deletes and replaces the entire definition of A. Coverage 1. Covered Property in CP 00 20–Builders Risk Coverage Form. The revised list of covered property includes only the specified installation. It is the one listed and described on the schedule. Coverage applies only while it is under construction. It covers labor, material, and supplies.

Additional Condition 2. Need for Adequate Insurance in CP 00 20–Builders Risk Coverage Form is amended to include only the value of the installation listed and described on the endorsement schedule or the declarations.

 

Example: Johnson Builders is renovating the Greenery Apartments. Johnson agrees to provide builders risk coverage for the project. Greenery enters into a contract with a group of Amish craftsmen called Amish Folks for all cabinetry work and carves out their work from its contract with Johnson. Amish Folks does not carry any insurance. Greenery purchases CP 00 20–Builders Risk Coverage Form and adds CP 11 15–Builders Risk–Separate or Sub-contractors Coverage. The apartment building is the premises and building. Amish Folks is listed as the contractor and cabinet installation is listed as the installation.

CP 11 14–BUILDERS RISK–SEPARATE OR SUBCONTRACTORS EXCLUSION

This endorsement allows the named insured to exclude the value of a specific contractor's installation or work without affecting the rest of the builders risk coverage provided. This approach is especially helpful when there are a number of different contractors and some of them provide builders risk or installation coverage for the named insured’s benefit as the project owner.

The specific premises and building number, the contractor's name, and the type of installation must be entered in the appropriate spaces on the endorsement schedule. This endorsement can be used for more than one location, for different contractors at the same location, or for different types of installations. The value of any installation or work listed and described is treated as Coverage 2. Property Not Covered on CP 00 20–Builders Risk Coverage Form and is deducted from the limit of insurance that applies.

Additional Condition 2. Need for Adequate Insurance in CP 00 20–Builders Risk Coverage Form is amended because of this restriction. The amendment states that the building or structure’s value does not include the value of the installation described on the endorsement schedule. If the builders risk coverage is written on a reporting basis, the designated installation’s value is not reported. Using this approach means that the project is still properly insured to value even though the installation’s value is removed. It allows the named insured to save on its premium costs by eliminating duplicate coverage.

 

Example: Continuing with the Greenery Apartments example above, the Johnson Builders contract contains the Amish Folks carve-out. Johnson Builders provides the carve-out information to its builders risk carrier and requests that CP 11 14–Builders Risk–Separate or Sub-contractors Exclusion be added to exclude the cabinet installation by the Amish Folks from the coverage.

 

This is a significant restriction of coverage. As a result, the entries on the schedule are very important and must be thoroughly explained to the named insured, considered carefully, reviewed periodically, and revised as necessary.

 

Example: Phyllis' Fine Fabrics decides to construct a new building valued at $1,000,000. Phyllis acts as the general contractor and asks her agent to provide coverage using CP 00 20–Builders Risk Coverage Form. She is shocked when informed of the premium charge and starts asking questions and looking for alternatives. Phyllis discovers that the building’s total value includes the cost of the foundation but there is little chance that it will sustain any kind of loss. Phyllis decides to deduct the value of the foundation and exclude it. Her agent agrees, lists the contractor and the foundation on CP 11 14–Builders Risk–Separate or Sub-contractors Exclusion, reduces the building value to $950,000, and also reduces the premium charge.

RATES AND PREMIUMS

There is no specific rating or premium calculation to use these endorsements. However, the limits required for the specific builders risk project are lower when either of them is used. These lower required limits produce lower premiums because the definitions of covered property and property not covered are revised.