Builders Risk Coverage: Navigating Hard and Soft Costs, Delay in Opening Expenses and Construction Delay Measurement

Description

Builders risk policies generally cover all risks of property damage during construction unless specifically excluded. These policies cover loss caused by external causes, as well as—subject to exclusions and limitations—property damage caused by acts of third parties and damage due to negligence of contractors or subcontractors.

Builders risk losses consist of three key components: hard costs, soft costs, and business income or loss of rents. Hard costs are the cost of the material and labor. Soft costs are those expenses resulting from a delay in opening such as additional loan interest, taxes, marketing and re-leasing expenses, administrative expenses, and architectural/engineering fees. Business income or loss of rents cover the result of a delayed project completion when caused by property damage.

Recovery for defective design and workmanship is limited to situations in which it causes property damage to other non-defective work. If the policy exclusion includes an ensuing loss provision the cost of repairing the faulty work is excluded, but the damage to other property ensuing from the faulty work is covered.

Listen as our authoritative panel of construction attorneys guides you through builders risk insurance coverage and discusses how to measure and prove construction delays. The panel will address common areas of disputes between contractors and insurers such as defective design and workmanship, ensuing loss, and length of delay.