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Builder's Risk policies--Who pays?


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35 minutes ago, joel hoffman said:

 Whether Direct or indirect wasn’t part of  the actual question.

Must the contractor purchase it and is it allowable were the OP’s expressed concerns in the thread.

Not so.  Please re-read the original posting at the very top of this thread.  The question was expressly whether builder's risk insurance can be a direct cost -- here's the quote:  "can it be considered a direct cost on their proposal?"

Not having gotten a direct answer from the Government, I can easily see a contractor shifting to ask, "Does the Government require...?"  But really, that is a question in disguise, because if the Government answers YES, the contractor will use that as a basis for a direct charge.

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9 minutes ago, kathilou said:

Thank you, again--especially for actually reading the original question. :)  Now, this almost circles back to the question I asked yesterday about the Hurricane Michael effect on labor and material prices.

Hope they purchased BR coverage and that it applies to damage to the ongoing work.  Been a long time since I researched coverage terms. 

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1 minute ago, ji20874 said:

Not so.  Please re-read the original posting at the very top of this thread.  The question was expressly whether builder's risk insurance can be a direct cost -- here's the quote:  "can it be considered a direct cost on their proposal?"

Not having gotten a direct answer from the Government, I can easily see a contractor shifting to ask, "Does the Government require...?"  But really, that is a question in disguise, because if the Government answers YES, the contractor will use that as a basis for a direct charge.

If it’s allowable it could be direct or indirect as long as it isn’t inconsistently  duplicative. In other words, don’t include it as a normal cost in indirect pools then direct charge it, too. 

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10 minutes ago, kathilou said:

Now, this almost circles back to the question I asked yesterday about the Hurricane Michael effect on labor and material prices.

So, the other posting from yesterday was about a construction contract?

The standard FAR clauses for construction contracts do not envision an increase in the contract price to cover a contractor's increased costs because of an unusually severe weather happening -- they do provide for additional time (well, they bar T4D because of not meeting the end date, which effectively is a grant of additional time), but not additional money.  This has been tested many times and the rule holds true.

But if the contractor had purchased builder's risk insurance, and that insurance covered hurricanes, then the insurance company would cover the contractor's additional costs.  That is fair.  If the contractor didn't buy the insurance, or didn't buy a solid policy, then any cost impact remains with the contractor.  That is fair.

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1 minute ago, joel hoffman said:

If it’s allowable it could be direct or indirect as long as it isn’t inconsistently  duplicative. In other words, don’t include it as a normal cost in indirect pools then direct charge it, too. 

That's true -- I agree.

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Standard BR doesn’t normally cover cost impacts  and (as alluded to by ji) doesn’t cover Hurricane Damage to the ongoing work unless specifically provided for in the policy. 

https://en.m.wikipedia.org/wiki/Builder's_risk_insurance

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  • 8 months later...

What if the builder's risk contains unallowable costs such as advertising and marketing, claim preparation costs, fine arts, etc.  I understand that it possibly be in the interest of the Government to pay for builders risk for natural disasters but what about those unallowable costs covered under their builder's risk or the costs of vandalism caused by their own employees, negligence by the contractor?  The permits and responsibility clause states that Govt shall not pay for contractor fault or negligence.

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