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Insurance Abstract
A method and apparatus of administrating a builders risk insurance
program with a computer system wherein builders may initiate coverage
for individual building projects as they are begun from remote terminals
by entering data on each project into a production scheduler that
communicates with a central computer system that aggregates active
building projects for determination and payment of metered builder's
risk insurance coverage.
Insurance Claims
1. A method of metering during selected predetermined periods a
premium payment payable to an insurer for a collateral risk policy
covering loan proceeds from a lender drawn by a builder for constructing
a plurality of projects that are subject to risk of loss during
construction, comprising: (a) entering to a production scheduler
that tracks construction of a plurality of projects a building project
information for a new project subject to insurance coverage through
a collateral risk policy; (b) applying a premium rate factor to
the aggregate of the building values of the plurality of projects
tracked by the production scheduler as being under construction
during a predetermined period to determine a premium for the period;
(c) transferring a monetary amount equal to the premium from a loan
proceeds account for the builder to a coverage payment account for
the insurer; (d) periodically entering to the production scheduler
a sold date for a particular one of the projects to show said project
as no longer under construction, whereby the production scheduler
does not include the building value of said project in subsequent
step (b); and (e) repeating steps (b) and (c) for subsequent periods,
while conducting step (a) for additional ones of new projects and
conducting step (d) for sold ones of the projects, whereby the premium
determined in step (b) is based on projects under construction during
the period.
2. The method of metering as recited in claim 1, wherein the building
project information comprises a project start date, a geographic
location, and a building value.
3. The method of metering as recited in claim 1, further comprising
the step of generating a stop coverage grant for at least one selected
geographic area, whereby a new project within the selected geographic
area is restricted from being included in the aggregate of projects
for step (b).
4. The method of metering as recited in claim 1, wherein data on
the weather predicated for a geographic area of a specific building
project is entered into the computer system and updated and wherein
step (d) the initiation of insurance coverage the specific building
project is suspended while the weather data includes dangerous conditions
data for said geographic area.
5. The method of metering as recited in claim 1 further comprising
the step of generating a printed certificate of insurance coverage
for the building project entered in step (a) following the aggregation
of the building project in step (b).
6. The method of metering as recited in claim 1, further comprising
the step of enabling a plurality of vendors to access the production
scheduler for coordinating and scheduling delivery of vendor goods
and services for the specific building project while restricting
access by the vendor to the insurance coverage data.
7. An apparatus that meters a premium payment during a predetermined
period to an insurer for a collateral risk policy covering loan
proceeds from a lender drawn by a builder for constructing a plurality
of projects that are subject to risk of loss during construction,
comprising: a production scheduler operative by a builder to track
a construction process for each of a plurality of projects that
are subject to risk of loss during construction, each project tracked
by the production scheduler having project information on which
insurance coverage premium can be determined; a funding account
of loan proceeds accessible by a builder for constructing the plurality
of projects; an analyzer that communicates with the production scheduler
to determine a construction status of each of the plurality of building
projects, aggregates building values of projects under construction
based on the project having a start date and not having a sold date,
and determines a premium for a predetermined period by applying
a premium rate factor to the aggregate building value; and means
for transferring an amount equal to the determined premium from
the funding account to an insurer payment account, whereby the premium
determined by the analyzer is based on projects under construction
during the period.
8. The metering apparatus as recited in claim 7, wherein the building
project information comprises a project start date, a geographic
location, and a building value.
9. The metering apparatus as recited in claim 7, further comprising
weather evaluating means for generating a stop coverage signal to
restrict granting insurance coverage for a new project in a selected
geographic area based on weather conditions.
10. The metering apparatus as recited in claim 7, further comprising
a reporter that generates a printed certificate of insurance coverage
for a new building project following the aggregation of the building
project by the analyzer.
11. The metering apparatus as recited in claim 7, further comprising
vendor communication means for a plurality of vendors to access
the production scheduler to coordinate and schedule delivery of
vendor goods and services for the specific building project while
restricting access by the vendor to the insurance coverage data.
12. The metering apparatus as recited in claim 7, further comprising
a communicator that periodically communicates project information
from the production scheduler to the analyzer.
13. An interactive network selectively engagable by an insurer
providing a collateral risk policy covering loan proceeds from a
lender drawn by a builder for constructing a plurality of projects
that are subject to risk of loss during construction metered as
to predetermined periods, comprising: a builder that tracks construction
activities for a plurality of projects using a production scheduler
that includes a start date, geographic lication, and building value
for each of said projects; a lender providing a source of funds
account accessible by the builder periodically for construction
of the projects; an insurer providing a collateral risk coverage
policy payable to the lender in the event of loss of a project during
construction by the builder; an analyzer that interrogates the production
scheduler to determine a construction status of each of the plurality
of building projects, aggregates building values of projects under
construction based on the project having a start date and not having
a sold date, and determines a premium for a predetermined period
by applying a premium rate factor to the aggregate building value;
and means for transferring an amount equal to the determined premium
from the source of funds account to an insurer payment account,
whereby the premium determined by the analyzer is based on projects
under construction during the period.
14. The interactive network as recited in claim 13, further comprising
a reporter operable by the insurer to determine a current amount
of underwriting risk based on the aggregate building values of projects
under construction.
15. The interactive network as recited in claim 14, wherein the
reporter is accessible by the lender to report on projects under
construction.
16. The interactive network as recited in claim 13, further comprising:
a risk assessor that evaluates underwriting risks at a plurality
of locations to generate a stop coverage signal for selected locations;
and an access device operable by the insurer to stop acceptance
of new projects to the production scheduler for insuring in the
selected locations and to release for acceptance locations no longer
subject to the stop coverage signal.
17. A method for a construction builder having a plurality of construction
projects to initiate and monitor builders risk insurance with a
central computer system accessible from a remote terminal, comprising
the steps of (a) obtaining by a builder a blanket coverage builders
risk insurance policy for a plurality of building projects from
an insurance provider having a central computer database of insurance
policy terms from which insurance premiums may be computed for building
projects of the builder; (b) entering project data on a specific
building project into a production scheduler; (c) communicating
the building project data to the central computer database of an
insurer; (d) computing an insurance premium for the aggregate of
building projects for the builder; and (e) communicating the initiation
of insurance coverage for the specific building project.
18. The method of claim 17 wherein step (b) the builder enters
geographic data and building value and size data for the specific
project.
19. The method of claim 17, further comprising the step of suspending
insurance coverage in a selected geographic area based on evaluation
of weather for the selected geographic area.
20. The method of claim 17 further comprising the step of generating
periodic reports that list all current projects subject of insurance
coverage.
21. The method of claim 17 further comprising the step of generating
a printed certificate of insurance coverage for the specific building
project.
22. The method of claim 17 further comprising the step of terminating
a selected one of the projects from the determination of the premium
in step (d).
23. The method of claim 22, wherein terminating comprises the builder
entering to the production scheduler sale information as to the
selected one of the projects.
24. The method of claim 17, further comprising the step of enabling
a plurality of vendor access the construction scheduler for coordinating
and scheduling delivery of vendor goods and services for the specific
building project while restricting access by the vendor to the insurance
coverage data.
Insurance Description
[0001] This application is a continuation in-part of co-pending
application Ser. No. 10/307,000, filed Nov. 27, 2002, claiming priority
benefit of provisional patent application Ser. No. 60/363,521 filed
Mar. 13, 2002, incorporated herein by reference.
TECHNICAL FIELD
[0002] The present invention relates to the administration of builder's
risk property insurance. More particularly, the present invention
relates to the automated metered administration of builder's risk
property insurance for multi tasks building projects.
BACKGROUND OF THE INVENTION
[0003] Professional builders are usually not self insured but rather
purchase insurance to cover risks of loss or damage to buildings
as they are being constructed. They also usually borrow the funds
needed for construction from lending institutions which also require
risk protection. This mandates that the builder or general contractor
usually secure an insurance policy from an insurance company for
each building project, notify the insurance company of the amount
of coverage required as each project progresses and becomes more
valuable, thus requiring increasing levels of financial protection,
pay the premiums due periodically, and maintain records. Due to
the ever changing dynamics of such insurance programs, their administration
is relatively burdensome on all parties involved in comparison to
more static insurance programs such as personal property insurance
and life insurance. Indeed, some builders may have 50 or more buildings
on different lots at various stages of development at any one time
within a single subdivision.
[0004] Heretofore, insurance companies issued a separate policy
to the builder for each of the particular construction projects.
The lender is shown as loss payee. Generally, the term of the loan
is relatively short (as compared to a 20 year mortgage). There are
a large number of individual policies. For large contractors, the
insurance company may agree to underwrite blanket insurance. However,
there is a lack of uniform insurance coverage related to the value
of the construction and the value of the advanced loan proceeds.
The builder typically makes the arrangements for the loan from the
lender and also makes arrangements for the collateral loan insurance.
This creates a high level of dependency on the builder to initiate
and maintain insurance coverage, while the circumstances are such
that the lender is the party most at risk. The current lending/borrowing/insuring
mechanism is inefficient, and exposes the lender to significant
risks of loss. Also, the insurer provides builder risk coverage
for construction activities that experience changing value as the
project commences from a cleared building lot to a completed building
ready for sale and closing. The builder may undertake a greater
number of projects than contemplated, and the insurer thereby may
be incurring greater loss risks than expected. At annual audits,
the insurer may find that the risk exposure was significantly greater
than the coverage paid for. In such circumstances, the contractor
owes the insurer additional premiums for the incurred actual risk
exposure exceeding that contemplated. The additional premiums may
be difficult to collect.
[0005] It thus is seen that a need exists for an automated method
of administrating insurance coverage for multi tasks building projects.
It is to the provision of such that the present invention is primarily
directed.
SUMMARY OF THE INVENTION
[0006] The present invention meets the need in the art for a computer
automated method of administrating and metering an insurance program
for multi tasks building projects, in which the centralized apparatus
enables builder to initiate, report and confirm insurance coverage
on building projects being constructed under a single blanket builder's
risk policy from a third party insurer to the builder that tracks
building projects using a production scheduler. The method is useful
for example in providing and maintaining insurance for housing developers
as they build and sell individual houses on individual lots of residential
subdivisions.
[0007] In a preferred form of the invention, master insurance policy
data is entered into a central computer of a computer system that
includes building parameters such as geographic data, building size
and lender identification from which date premiums may be computed
for specific building projects of a designated builder. The builder
enters specific data on a specific building project from a remote
terminal of the computer system directly or through communication
with the central processor and the builder's production scheduler
that tracks construction progress of building projects for the builder.
The central computer then computes the premium for that project
which is displayed at the remote terminal. The builder himself may
then initiate insurance coverage on that project by entering acceptance
from the remote terminal.
[0008] In another aspect, the present invention meets the need
in the art by providing an apparatus for administrating a builders
risk insurance program with a computer system that includes a central
computer that is accessible from at least one remote terminal. An
insurer issues a master builders risk insurance policy to a builder.
A central computer system having a building projects database maintained
by the insurer includes a plurality of building parameters for a
specific building project of the builder to be covered by the master
builders risk insurance policy. A remote terminal accessible by
the builder is used to enter building parameters on the specific
building project into the computer system. The computer system computes
the insurance premium for the specific building project using the
building parameters and displays the premium at the remote terminal.
The builder selectively initiates builders risk insurance coverage
under the master builders risk insurance policy for the building
project by acceptance entry from the remote terminal.
[0009] Objects, features, and advantages of the present invention
will become apparent upon reading of the following detailed description
in conjunction with drawing and the appended claims.
BRIEF DESCRIPTION OF THE DRAWING
[0010] The drawing is a block diagram showing insurance coverage
administered in accordance with the invention for several builders
each of whom has a number of building projects in development that
are at risk of loss or damage.
DETAILED DESCRIPTION
[0011] FIG. 1 generally illustrates use being made of the new administration
method by a plurality of builders. Each builder is seen to have
a number of building construction projects in progress. In this
example each project of each builder is seen to be financed by a
common lender and to be insured by a common insurance provider.
However, the projects may be financed by distinct lenders. A master
or blanket policy is issued to each of the builders in favor of
the lender. The central computer is programmed to generate certificates
of insurance coverages to the lender as new projects are begun and
financed. It also periodically generates reports to the builders'
computer terminals via the internet.
[0012] More specifically, the insurance provider issues a master
policy to each builder in preparation for the provision of property
insurance for projects as construction begins. Terms of the master
or blanket policy are entered into the computer database. These
terms include identification of the builders, the insurance providers
and lenders, the policy numbers, and the effective dates. Premium
rates, deductibles and limits on coverages are entered and a billing
account number generated.
[0013] With this new administration method the builders themselves
have direct access to the automatic system using their own computer
terminal as via the internet, a wireless terminal device or telephone,
or other computer communication device, to initiate coverage for
each of their projects as they are started. To enable this upon
purchase of their blanket policies they are issued user codes and
passwords for this direct access.
[0014] To initiate coverage for a project a builder is prompted
to enter the project location, the type of construction, such as
brick or frame, the replacement cost of the building less land and
land improvement costs, the size of the building, the number of
stories and the name and address of the lender. This detailed building
project information typically is initially entered by the builder
to the builder's production scheduler that tracks the multi-tasks
required to construct a building. In an alternate embodiment discussed
below, the production scheduler subsequently communicates with the
central computer and supplies the building specific project information.
[0015] Upon entry of the building project information, the central
computer is programmed to compute premiums in accordance with the
current terms of the blanket or master policy. In this regard territorial
multipliers may add surcharges for hazardous locations such as along
coastlines or geological fault lines, indexable as by zip code.
The computed premium is displayed on the builder's terminals who
may then activate coverage or choose instead to store the displayed
information for possible later use.
[0016] Once project coverage is initiated under a blanket policy
the computer generates a certificate of insurance coverage that
is sent to the lender and to the builder. The timing for periodic
reports is then initiated.
[0017] Preferably a credit card billing system is used for payment
of the insurance premiums. Upon initiation of coverage the credit
card insurer is issued access codes and notified of project identifications
and premium charges along with the insured's billing account number.
The billing service credits premiums less its own fee to the central
computer and issues periodic statements that list all the insured
projects and their premiums to the builder for payment. Premiums
are periodically paid to the insurer. Premiums can also be made
by electronic funds transfer from the builder's account containing
draw-down funds for construction projects to a premium payment account
of the insurer. A reporter generates reports of the insured projects
and transfers of premium and communicates these reports to the insurer
and the builder.
[0018] The administration method may also include hazardous weather
tracking information and automatically suspend acceptance of new
projects in the affected area during hazardous conditions. Again,
zip codes may be used for locations in this regard. Once a project
is completed and the building sold, the insurer is notified and
that project is deleted from coverage under the blanket policy.
[0019] It is to be appreciated that the project information entered
by the builder to initiate builders risk insurance coverage according
to the present invention is used in an alternate embodiment that
further includes a construction scheduling system by which the builder
schedules construction activities for the project and tracks construction
progress and includes access to the construction scheduling system
by vendors to coordinate and schedule delivery of goods and labor
services for the project while preventing access by the vendors
to the insurance-related data.
[0020] In this embodiment, the disclosed central computer interconnects
via communications channels or networks such as with computer access
devices with the builders and also directly to the production scheduler
for the respective builder, while also communicating with the insurer
providing the collateral risk policy covering loan proceeds from
the lender drawn upon by the builder for constructing a plurality
of building projects that are subject to risk of loss during construction.
[0021] Each building project tracked by the production scheduler
has at least an associated start date and building value, and includes
the building site specific information described above. The builder
operates the production scheduler to track a construction process
for a plurality of projects that are subject to risk of loss during
construction. Periodically, the builder updates the production scheduler
with the progress of construction enabling sequencing of delivery
of materials and attendance by vendors and contractors handling
the various tasks associated with the construction. Upon completion
of the particular project, the builder terminates tracking by entry
of a close or sale date for the project. The builder draws on the
funding account that holds the loan proceeds from the lending institution.
[0022] The central computer includes an analyzer that periodically
interrogates the production scheduler to determine a construction
status of each of the plurality of building projects for the builder.
Thus, the central computer maintains a current status of the projects.
The analyzer periodically aggregates the building values of projects
under construction based on the project having a start date and
not having a sold date. The analyzer then applies insurance rating
values to the aggregated amount to determine a premium. The premium
is based on a predetermined period, for example, a daily determination.
This is accomplished by applying a premium rate factor for the particular
builder to the aggregate building value. It is to be appreciated
that in an alternate embodiment, the central computer periodically
interrogates the production scheduler of the builder to aggregate
building value rather than maintain building project date on a separate
database of the central computer.
[0023] The periodic premium can then be transferred from the funding
account to an account of the insurer. This can be accomplished in
an aggregated manner by accumulating the periodic premium as a sub-period
amount, for example, a daily amount accumulated over a one month
period to yield a monthly premium based on the builder's daily actual
construction status. Nevertheless, the central computer transfers
an amount equal to the determined premium from the funding account
to the payment account of the insurer. An alternate payment mechanism
involves the use of payment and collect by charge card account,
as discussed above.
[0024] Upon completion by sale or other disposal of the project,
the builder updates the production scheduler. This information communicates
to the central computer and the analyzer thereafter does not include
the particular completed project when determining the periodic premium.
The premium thus determined by the analyzer is based on active building
projects of the particular builder during the period for which a
premium is being determined.
[0025] The practice of the present invention accordingly involves
a method of metering (during selected predetermined periods) a premium
payment payable to the insurer issuing the collateral risk policy.
The builder draws on the loan proceeds from the lender for constructing
the plurality of projects that are subject to risk of loss during
construction. The builder enters building construction information
to the production scheduler that tracks construction of projects
for the builder, and particularly including the building start date,
location, and building value for each new project that is subject
to insurance coverage through the collateral risk policy. The production
scheduler communicates this building start information to the central
computer. Periodically, for example, daily, the central computer
makes a determination of the periodic premium. This is accomplished
by applying a premium rate factor to the aggregate of the building
values of the plurality of projects tracked by the production scheduler
as being under construction during a predetermined period. The central
computer then transfers a monetary amount equal to the determined
premium from an account, such as the loan proceeds account for the
builder, to the coverage payment account for the insurer. This transfer
can be accomplished on the same period as the determination of the
premium, or alternatively, periodic premiums can be collected as
sub-periods to a greater period. For example, daily determined premiums
can be collected and the transfer made monthly.
[0026] The builder periodically enters project update information
to the production scheduler. This includes particularly a sold date
for a particular one of the projects. This shows the project to
the production scheduler (and to the central computer) as a project
as no longer under construction and thus no longer at risk for loss
to the builder. The production scheduler accordingly does not include
the building value of that completed project in subsequent determinations
of aggregate building values. However, the central computer repeats
the steps of aggregating the project values and determining the
periodic risk coverage premium based on the buildings at risk during
the period, while initiating coverage for new projects commenced
by the builder and ceasing to include projects marked as sold. The
present method thereby meters the premium for collateral risk coverage
based on based on projects under construction during the period.
A reporter device interacts with the central computer and the projects
database to provide status reports to the insurer, the lender, and
the respective builders.
[0027] It thus is seen that a method is now provided whereby builders
may secure metered insurance coverage for projects online on an
automated basis with advance knowledge of the cost involved. The
computerized method administers the insurance program automatically
and continuously makes adjustments for changing coverage, premiums
and reports as projects are added and deleted by the builders. Although
the administration method has been described in its preferred form,
it should be understood that modifications, additions and deletions
may be made thereto without departure from the spirit and scope
of the invention as set forth in the following claims. |