In your consultation, you brought up builders’ risk with the contractor or property owner. You helped them find an appropriate policy after explaining their alternatives for protecting their newly built home. Then an accident occurs on the construction site and causes extensive damage to the building. After filing a claim with their insurer, they learned that the percentage of work completed was listed inaccurately on their policy, which led to the denial of their claim. And it all started with an honest blunder during the policy’s issuance process.

This is an everyday occurrence and a familiar tale. As silly as it may sound, we’re all just trying to make it through life here. Thankfully, insurance agents can spare themselves the awkwardness of having these discussions and keep their clients from becoming dissatisfied by being more aware of typical problems during the policy issuance process.

That said, we have listed the most frequent errors in a residential builder’s risk claim and how agents may avoid them. Below are some of the most important things to remember.

1. Get the Precise Location for the Upcoming Building

Your client may have to wait until an official street name is created before they can determine the exact address while developing a single-family house in a new area. Legal addresses aren’t often readily available in new developments, but a lot number might be.

Whenever a full street address is not yet accessible, it is essential to at least have the subdivision name and lot number correct. With this data, the claims division can properly assign claims. The claims office cannot pay your customer if they cannot be contacted at the given address.

2. If You’re Calculating the Percentage of the Job That’s Been Finished, Double-Check Your Work

A policy that does not adequately reflect the extent of work and construction progress can lead to a refused or reduced claim payout, regardless of whether the customer is seeking insurance for a brand-new duplex or a kitchen remodel.

Using the investment amount divided by the work’s value yields an accurate completion percentage. For instance, say a client is spending $100,000 on a building. So far, they’ve invested $25,000 in it. This means that there has been a progress of 25% thus far on the project.

3. Ensure You and Your Customers Are Using the Appropriate Valuation Method

Actual cash value (ACV) is used for residential renovation projects that include the existing structure, while replacement cost valuation is used for restoration projects that do not include the existing structure.

Instead of utilizing the purchase price or an inflated value based on the cost of renovations, utilize the worth of the existing building.

4. Educate Clients on How to Accurately Report Project Value

A common mistake in house renovation is to lump together the pre-renovation and post-renovation values into one figure. Either you under-insure the project or overcharge the premium, which can result in disgruntled clients.

If clients aren’t willing to pay for existing structure coverage, you may save yourself a lot of trouble by ensuring that the existing structure’s worth isn’t factored into the project value.

5. Provide Detailed Project Descriptions and Ask Clients Detailed Questions Regarding the Project

Simply put: make zero assumptions regarding the building initiatives of residential clients. If a customer says something like, “We’re adding another storey to our home,” you should probe more to find out the specifics of their plans.

If you want to get insurance for a project, you need to provide extensive details about it and answer a lot of questions. Uncertainty about whether or not a certain project qualifies for a given benefit can result in disappointed clients.


Understanding the different sources of risks associated with residential building projects and taking proactive steps to reduce them can help to avoid common residential builders’ risk claim problems.

By managing risks proactively, residential builders can help minimize their potential for costly claims and ensure their projects remain on track.

If you are looking for a company that provides commercial property insurance in Philadelphia, look no further than our services here at Pascal Burke Insurance Brokerage Inc. We are specialists in an array of policies that cover not only general cases but specialty contractors. Call us today, and let us discuss all your viable insurance options.