CP 00 20–BUILDERS RISK COVERAGE FORM OVERVIEW

(June 2019)

INTRODUCTION

The Insurance Services Office (ISO) Commercial Property CP 00 20–Builders Risk Coverage Form insures against direct physical loss or damage from covered causes of loss to buildings and structures that are under construction. It can also be used to cover renovations, remodeling, and improvements in existing buildings. This is one of two coverage approaches for construction and renovation risks. The other is provided by a variety of non-filed Inland Marine coverage forms.

AAIS Builders Risk Coverage Forms

ISO Builders Risk Coverage Form

ADVANTAGES OF CP 00 20–BUILDERS RISK COVERAGE FORM

CP 00 20 has a number of features that some consider to be advantages over non-filed forms:

As a filed coverage form, it is subject to rate filings and cancellation laws that favor and protect the named insured.
It is a standardized form. This makes it easier to compare it directly to individual insurance company builders risk coverage forms.
It can easily be added to the commercial package policy.
Rates are filed and are easier to understand than primarily judgment rates used with inland marine coverage forms that different insurance companies offer.
CP 00 20’s basic coverage is easily modified by a variety of available endorsements. In addition, coverage can be broadened or limited by using any of the three different causes of loss forms.

ADVANTAGES OF COMMERCIAL INLAND MARINE BUILDERS RISK COVERAGE FORMS

The various inland marine builders risk coverage forms also have certain advantages:

They are usually more flexible and are subject to more underwriting judgment.
They have more reporting features and options. This enables contractors engaged in multiple construction projects to select a reporting approach that aligns with their methods and operations.
Different rating and pricing approaches and methods may be utilized to enhance the building contractor's cash flow.
These coverage forms may be especially attractive to building contractors more interested in form and coverage flexibility than in a standardized form.
Coverage is more easily negotiated, and pricing is more competitive with multiple insurers and coverage forms and policies.

ELIGIBILITY

CP 00 20–Builders Risk Coverage Form eligibility includes any type of building under construction, regardless of the intended occupancy. This means it can even be used to cover dwellings and farm buildings during the course of construction.

Note: Builders risk coverage ends when construction is complete, and the building or structure is put to its final or intended use.

ELIGIBLE INSUREDS

Any party with a financial interest in the building or buildings under construction may be named as an insured under CP 00 20. The party can be only the building owner, only the building contractor, or the building owner and the building contractor jointly. As a result, if there is a covered loss, CP 00 20 states that any insured named receives payment only to the extent or amount of its financial interest. This makes knowing about any financial interest changes during the policy term very important.

POLICY MAKE-UP

The ISO Commercial Property Builders Risk Policy consists of eight basic parts or forms:

IL DS 00–Common Policy Declarations
IL 00 17–Common Policy Conditions

This contains the conditions common to all commercial lines of insurance. It is a mandatory form for all simplified monoline or multi-line policies.

Commercial Property Declarations

CP 00 90–Commercial Property Conditions

CP 00 20–Builders Risk Coverage Form

One or more of the Causes of Loss Forms

These forms describe the types of losses insured and the exclusions that apply.

Policy Cover or Policy Jacket developed by individual insurance companies

These forms may also include an index or a table of contents to meet requirements that some states impose.

CAUSES OF LOSS FORMS

The Causes of Loss Forms describe the types of losses insured, exclusions, and relevant limitations that apply. The policy is not complete unless at least one of the following causes of loss forms is included.

CP 10 10–Causes of Loss–Basic Form

This form provides coverage against fire, lightning, explosion, windstorm, hail, smoke, aircraft or vehicles, riot or civil commotion, sprinkler leakage, vandalism, sinkhole collapse, and volcanic action.

CP 10 20–Causes of Loss–Broad Form

This is an intermediate-level causes of loss form. It includes the basic causes of loss plus breakage of glass, falling objects, weight of snow, ice, or sleet, and water damage.

CP 10 30–Causes of Loss–Special Form

This form covers direct physical loss or damage caused by all types and causes of loss not specifically excluded or limited.

AVAILABLE ENDORSEMENTS

A variety of endorsements is available to tailor the ISO Builders Risk Coverage Form. Some are mandatory and required. Others are optional and permit customizing the standard form to meet a specific risk's coverage needs. Endorsements broaden, restrict, delete, modify, or add coverage.

UNDERWRITING

Underwriting builders risk coverage always starts with the project, the owner and the contractor. Project considerations include the length of the project, the construction of the buildings and the locations. The experience and loss history of the contractor is very important as is the financial backing by the project owner.

RATING

The ISO Property Manual describes how to rate the builders risk.