Assisted Living Facility Builders Risk: Pricing Methodology

What happens at policy audit for Assisted Living Facilities on Builders Risk?

At policy expiration, the carrier audits the assisted living facility's actual exposure for the past year. The rating basis used at audit is the same one used at issuance — per $100 of project value — applied to the documented actuals.

For Assisted Living Facilities, audit accuracy matters because errors compound. An over-estimate at binding overpays for a year; the audit returns it. An under-estimate underpays for a year; the audit owes it. Either way, the policy ends at the correct net cost; the question is just cash-flow timing.

The math behind a Assisted Living Facilities Builders Risk policy

For a representative assisted living facility, the Builders Risk premium math works roughly like this: (exposure per $100 of project value) × (base rate per unit) × (experience modifier) × (schedule credit or debit) × (other adjustments) = premium.

If the rating exposure is 100 units, the base rate is $10/unit, the experience modifier is 0.95 (a 5% credit for clean claims), and the schedule rating applies a 3% credit, the base premium is $100 × $10 × 0.95 × 0.97 = $922. Multi-line discounts, payment-plan fees, and state taxes/surcharges produce the final billable amount.

How does schedule rating affect Assisted Living Facilities Builders Risk?

Filed schedule-rating plans give underwriters discretion to apply credits or debits to Assisted Living Facilities Builders Risk based on operational qualities. The underwriter documents the rationale; the credit or debit applies through the policy term.

Schedule credits add up to real money. A 10% schedule credit on a $15,000 premium is $1,500/year — and that credit usually carries forward at renewal as long as the operational factors that justified it remain.

How three years of claims affect Assisted Living Facilities Builders Risk pricing

Assisted Living Facilities experience modifiers reflect actual loss performance against expected. The actual is your paid losses (excluding incurred-but-not-paid reserves on open claims); the expected is the class's average loss-cost benchmark.

Improving the mod is a long game. A single clean year reduces the most recent (heaviest-weighted) year's impact. Three consecutive clean years can move a debit mod into credit territory. The patience pays — mod credits compound across multiple policy lines.

The renewal-time math for Assisted Living Facilities Builders Risk

At renewal, the Assisted Living Facilities Builders Risk premium recalculates with updated inputs: the new base rate (from any approved rate filings), updated exposure (declared or audited), refreshed experience modifier, and any schedule-rating adjustments the underwriter applies.

The combined effect determines the renewal premium. A flat renewal year on a clean account might be ±3-5%. Years with claims or significant exposure changes can move premium ±20-40% or more.

Why two carriers price the same Assisted Living Facilities risk differently on Builders Risk

Two carriers can quote the same assisted living facility on Builders Risk and produce premiums that differ 15-30%. The difference comes from carrier-specific loss-cost multipliers (each carrier's adjustment to the ISO base rate), schedule-rating philosophy, and target loss ratios for the segment.

Some carriers actively pursue healthcare provider business and price aggressively for it; others see the segment as marginal and price defensively. Knowing which carriers are currently in either bucket is the broker's job — and it materially affects which markets to target.

Where Assisted Living Facilities accounts most often get over-rated on Builders Risk

Three methodology errors account for most Assisted Living Facilities Builders Risk overpayments: mis-classification (a class assignment that doesn't match the predominant operation), over-stated exposure (more revenue/payroll declared than reality), and unclaimed credits (schedule rating left on the table).

The fix is process, not policy. Pre-renewal audits catch these errors before they get baked into another year of pricing.