Does Builders Risk Cover Construction Defects?

An illustrative ISO form lists defective design, workmanship, construction, renovation, and materials in its exclusions. The form’s ensuing-loss language can preserve coverage for a separate covered loss in some circumstances; it does not guarantee that all damage following a defect is paid. The distinction between correcting defective work and repairing other property damaged by it is important. Have the insurer identify the applicable exclusion, any resulting-loss exception or endorsement, and whether testing or commissioning changes the treatment. A builders risk policy is not a substitute for a contractor’s warranty or professional liability policy. A contractor warranty or performance obligation may address correction of defective construction, while professional liability can be relevant to an architect’s or engineer’s alleged services error. Neither should be presumed to pay a builders risk claim. Check the contract’s repair obligations alongside the property form’s defect exclusion and any endorsement that restores coverage for resultant physical damage.