Get Your COI Before the First Draw

When a bank or Farm Credit office finances a new poultry house, the money does not come in one lump. It comes in draws -- scheduled releases tied to construction milestones. Dirt work, slab, framing, equipment set, final.

Before the first dollar moves, the loan file has to be complete. And one of the last items that tends to be missing is the certificate of insurance, or COI. The COI is the lender's proof that the structure they are financing is insured from the day construction starts, that the lender is named on the policy, and that the coverage cannot quietly disappear.

No COI, no draw. It is that simple in most loan offices. A missing certificate does not just annoy your loan officer -- it pushes your dirt work date, which pushes your builder's schedule, which can push your first flock placement back weeks.

A COI for a poultry construction loan is not just a piece of paper that says "insured." Your lender is looking for specific items:

• Builders risk coverage on the structure under construction, at the full construction value.
• The lender named as mortgagee and loss payee. If the building burns down half-built, the check protects the loan.
• Additional insured status where the loan agreement requires it.
• A cancellation notice endorsement -- commonly 30 days -- so the bank hears about a lapse before it happens, not after.
• Policy dates that cover the whole build, from ground-breaking through completion.

If any one of those is missing, the file bounces back and the clock keeps running.

Here is the sequence that catches people. The loan closes. The builder wants to start Monday. The grower calls their current farm insurance agent on Thursday and asks for "insurance on the new barn."

A standard farm property policy does not cover a building under construction -- that is a different coverage type entirely. Many general agents do not write builders risk at all, or have to shop it to a market that takes days or weeks to respond. Meanwhile the draw sits.

The fix is to line up builders risk before closing, not after. The moment you have a signed construction contract and a closing date, that is the time to make the call.

Through the PGA Program, a poultry builders risk placement needs five things:

1. Borrower name and entity (exactly as it appears on the loan).
2. Site address and house count.
3. Total construction value.
4. Loan closing date.
5. The lender's mortgagee clause -- your loan officer has this on file.

With those five items, a same-day certificate is the normal outcome, not a rush job.

Builders risk is temporary by design -- a 12-month term meant to cover construction. The often-missed step is what happens at completion. If the builders risk policy simply expires, there can be a gap between "construction done" and "permanent farm policy active."

The PGA builders risk program is built to roll into the permanent PGA farm property program at completion, so the lender's file stays continuous and the grower never holds an uninsured building. Your loan officer will appreciate that detail more than you know -- lenders track insurance expirations on every file.

• Lenders hold the first draw until a correct COI is in the file.
• Correct means: builders risk at full construction value, mortgagee/loss payee named, cancellation notice endorsement, dates covering the build.
• Standard farm policies do not cover construction. Line up builders risk when the construction contract is signed.
• Five items bind it. Same-day COI is the goal every time.
• Make sure the coverage rolls into a permanent policy at completion -- no gap.