When a building under construction is to be insured, it is normally covered under a specialized contract known as the Builder’s Risk Form. There is a single Builder’s Risk Form under the commercial property portfolio program, which provides coverage on a completed value basis. Under this form, coverage is written for the final full value of the building, and a premium based on 55 percent of the 100 percent coinsurance builder’s risk rate is charged. Coverage continues during the process of construction but terminates automatically when the structure is completed and occupied. If the insured desires, the coverage can be converted to a reporting basis by endorsement. Builder’s risk coverage may be written to cover the interests of the buildingowner, the general contractor, and subcontractors, all of whom have an insurable interest in the building under construction.
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