To determine the correct answer to this question, let's evaluate each option provided in relation to a Builder's Risk policy:
1. Must reflect a Coverage A limit of 80% of the value of the property.
- This option suggests that the policy must cover 80% of the property's value. Typically, Builder’s Risk insurance policies cover structures under construction, and a requirement of 80% would be less common compared to full coverage.
2. May be insured for any limit.
- This option implies that there is no specific limit and coverage can be set at any amount. While flexibility in coverage amounts can exist in some types of insurance, Builder's Risk policies often have more standardized requirements for ensuring full value protection throughout the construction period.
3. None of the above.
- This option would only be correct if neither of the other options were accurate. However, it is often the case that standardized insurance policies have specific requirements.
4. Must reflect a Coverage A limit of 100% of the value of the property.
- This choice indicates that the policy must fully cover the property’s value. It is standard practice for Builder's Risk insurance to cover the total value of the property under construction, ensuring comprehensive protection against potential risks and damages.
Considering the typical nature and requirements of a Builder’s Risk policy, the appropriate answer is:
Must reflect a Coverage A limit of 100% of the value of the property.
This option ensures that the policy provides full coverage for the entire value of the property, which is essential in protecting the construction investment fully. Therefore, the detailed solution to the question is:
Answer: Must reflect a Coverage A limit of 100% of the value of the property.
