Why builders' risk is 'not a luxury coverage' | Insurance Business America
This article was produced in partnership with Victor Insurance.
Gia Snape of Insurance Business sat down with Jeff Benson, builders risk program manager at Victor Insurance Managers Inc., to discuss the importance of being fully covered for construction and renovation projects, Victor’s push to encourage green building practices, and bringing ease of doing business to broker partners.
Home renovation activity in the US has skyrocketed during the pandemic, as people sought to improve their dwellings in lockdown. Even as the costs of materials surge due to inflation, experts only see this trend ramping up over the next few years. Appetite for new homes also isn’t waning, with millennial consumers continuing to drum up demand.
But contrary to common belief, a typical homeowner’s insurance policy isn’t enough to protect construction projects large or small. This is because there are a multitude of risks to buildings under construction: from fires and natural catastrophes, to theft and project delays. Builders’ risk is the best solution, and it’s also mandated on construction projects that receive financing.
"It's not like a luxury coverage," said Jeff Benson (pictured), builders’ risk program manager at Victor. "Anybody building anything new or fixing it up should have it. There's no way to cover a project thoroughly other than builders’ risk.
“In many instances, if the premium is not paid the mortgagee will request the job be shutdown. This is a mandatory coverage for the majority of all construction projects.”
Victor relaunched the builders’ risk insurance program last year with an A++ carrier, an expanded appetite, and increased capacity. The program covers residential and commercial construction projects, including single-family homes, office buildings, apartments, municipal buildings, and more.
Builders’ risk is available on V2, Victor's online portal, where brokers can quote, bind, and issue a policy in minutes. A key value of V2 lies in its quick turnaround time and ease of doing business – crucial factors when purchasing builders’ risk insurance.
"Builders’ risk is very time sensitive because a lot of times the policy must be produced for closing [sale]. If we can make it easy for the agent to get a quote and issue the policy, that's a big part of the battle," Benson told Insurance Business.
Encouraging green builders
To incentivize more people to adopt green construction standards, Victor launched its new green builder coverage. The program encourages environmentally conscious construction practices by covering necessary costs related to complying with green certification standards.
Green certification determines the performance and sustainability of buildings through positive environmental design. It is awarded through an environmental rating system such as Leadership in Energy and Environmental Design (LEED) or Green Globes. Green building construction can include anything from the addition of a green roof, the use of environmentally sustainable building materials, or the installation of highly efficient heating and cooling systems.
Victor's green builder coverage includes restoring indoor air quality in the event of building loss or damage; recycling debris; replacing energy or water if renewable generating sources were used; and green recertification costs.
"If a building was LEED certified, but then there was a covered cause of loss during construction, the building needs to be recertified. We pay for the recertification up to $10,000 as automatic coverage built into the form. All of this goes back to encouraging builders to do this type of construction," Benson explained.
For covered indoor air quality loss, the policy will pay for the indoor air quality testing, the air flush-out procedure for the repaired or replaced space, and replacement of air filters. Costs of diverting debris from a landfill to a recycling facility are also covered in case of direct physical loss or damage.
Additionally, green building coverage pays for replacement water or electricity from a public utility if a building’s renewable energy source or water conservation system suffer a breakdown. Limits for green construction costs are also separate from the limits of builders’ risk coverage.
Ease of doing business
Victor’s V2 platform combines decades of underwriting experience with state-of-the-art technology. The increased efficiency means brokers can boost their profitability.
"What we've tried to accomplish with our platform is to make it even easier. We ask fewer underwriting questions, and that simplifies the process," Benson shared.
"Our studies show we asked up to 30% fewer questions than competitors. Once you enter the data and hit a button, you're going to get a quote very, very quickly. We think that's a differentiator between us and other systems.”
Benson added that Victor plans to continuously improve V2 to make it even more streamlined for agents. "Ease of doing business is really what it's all about: how you make it easy, ask less questions, and make it faster. Some agencies say if you're 30 seconds faster, then they’ll use you.”
Find out more about Victor's builders’ risk program here.
Victor Insurance Managers Inc. is one of the largest and most experienced underwriting managers of specialty insurance programs in the world. At Victor, underwriting management has been a distinct discipline for over 65 years.
Our expertise lies in evaluating and underwriting risks, developing, and executing risk management activities, and servicing accounts on behalf of our insurance carrier partners. We carefully select leading insurance carriers to partner with in our chosen markets and, in most cases, we act as the exclusive managing general underwriter. We then distribute our solutions through a large distribution network of licensed insurance agents and brokers.
Victor's mission is to consistently create superior products and to provide outstanding service and exceptional value to every customer. Our vision is to be recognized as an elite specialty insurance provider/distributor and grow through valued service, innovation, and expertise.