Wheaton, Illinois, Oct. 18, 2006--Property/casualty companies that insure construction contractors now have access to a new program that provides several inland marine construction coverages in a single policy form.

A new Contractors' Combination policy form and endorsements were recently added to the Inland Marine Guide, a leading source of policy forms, rating procedures, and underwriting guidelines for the traditionally nonfiled classes of inland marine insurance.

The Guide is developed and maintained by the American Association of Insurance Services (AAIS), a national advisory organization whose insurance line programs are used by more than 600 insurers as the basis for policies they sell to consumers and organizations.

The Contractors Combination base form covers four types of inland marine construction exposures that are typically insured by separate forms:

• Contractors' equipment and tools;

• Builders' risk;

• Installation floater; and

• Electronic business equipment.

Coverage for builders' risk and contractors' equipment is provided on a scheduled basis, and schedules are provided. However, the base form also includes a supplemental coverage with separate sublimits for unscheduled equipment and tools.

Installation floater coverage is provided on a blanket basis, so covered installation projects do not have to be scheduled. Also, electronic equipment (including computers, copiers, phone systems, etc.) is covered while at locations occupied by the insured; the locations do not have to be scheduled.

The Contractors Combination policy introduces new provisions designed to eliminate some of the confusion in the construction market over the definition of "soft costs."

"Soft costs" are generally recognized as additional expenses a project incurs after a delay due to a loss. Such expenses can include additional finance charges, additional real estate taxes, and additional advertising expense.

"Casual use of the term 'soft costs' sometimes leads insureds to believe they do not have coverage for certain soft costs when they do," says Robert Guevara, AAIS vice president for inland marine.

To address such misunderstandings, the Combination Contractors program introduces two provisions:

• A statement is included in the valuation provision saying that coverage is provided under the base form for "related construction costs that are re-incurred," provided they were included in the original valuation of builders' risk exposure.

• The standard soft costs coverage endorsement is labeled and worded to specify that it applies to "additional" soft costs beyond those that are part of the builders' risk valuation.

"The extra valuation provision was added to clarify that the value of a building project may include construction costs that are sometimes referred to as 'soft costs,' such as engineer's fees," says Sheila Morris, AAIS senior product development specialist for inland marine and the principal developer of the Contractors' Combination policy.

"To be covered under the base form, those construction costs must be included as part of the limit for the builders' risk project," Morris says. "The term 'additional' was added to our soft costs endorsement to emphasize that coverage under the endorsement is for certain costs that are in addition to the value of the builders' risk project."

Nearly 30 endorsements and sample schedules are provided with the Contractors' Combination policy, including the following:

• Electronics Coverage - Equipment And Tools: Covers off-board electronic equipment used to communicate with or keep track of contractors' equipment while at a jobsite.

• Additional Coverages Endorsement - Equipment And Tools: Extends coverage to construction trailers and their contents.

• Additional Coverages Endorsement - Builders' Risk And Installation Floater: Extends coverage under the Combination Form to covered property while waterborne. It also covers testing, personal property, and coverage for contract penalties.

• Additional Coverages Endorsement - Electronic Business Equipment: Can be used to provide coverage for incompatible hardware and media. The endorsement also provides foreign transit/location coverage and virus and hacking coverage for computers.

• Income Coverage - Equipment And Tools: provides coverage for loss of earnings caused by direct physical loss of or damage to covered contractors' equipment.

• Percentage Deductible Endorsement - Equipment And Tools: provides a deductible that is a selected percentage of the value of covered property, subject to a minimum and maximum deductible amount.

For information on affiliating with AAIS for use of the Inland Marine Guide, contact Rick Maka, director of marketing, at rickm@AAISonline.com or by calling 800/564-AAIS.