Builder’s risk insurance provides property coverage for buildings and structures that are under construction. If you’re a builder or a commercial property owner, you could face considerable monetary loss if something goes wrong with the construction of a building if you don’t have builder’s risk insurance.
This coverage is also known as “course of construction insurance.”
Builder’s risk insurance protects against fire, wind, theft and vandalism during the construction process. It also protects against lightning, hail, explosions and hurricanes. Here’s a look at all the things a builder’s risk insurance policy covers.
A builder’s risk policy may cover:
The total estimated cost of the completed building or structure will help determine the cost of a builder’s risk policy.
With a builder’s risk insurance policy, the cost of the policy also depends on the construction materials, type of project and policy details such as the coverage amounts and limits. It is a good idea to choose coverage limits that are equal to the estimated costs of construction.
Builder’s risk policies are available for new construction projects, remodeling and installation work. Projects are classified as either commercial or residential risks.
Construction projects don’t always stay on schedule. Here are some other costs
that you may incur if there’s a delay in construction:
These additional costs can also be covered with builder’s risk insurance policies.
To customize a builder’s risk insurance policy, you can add policy endorsements such as:
Endorsements allow you to create the specific type of builder’s risk insurance policy that best fits your policy needs. Consider endorsements carefully and choose the ones that make the most sense for your project.
Types of people and business who can benefit from builder’s risk insurance include:
Not everything is covered with builder’s risk insurance. For example, earthquakes and floods are generally not covered. Here’s a short roundup of other common exclusions:
Be sure to make note of a policy’s exclusions before buying it. You want to be aware of what costs you’ll be paying if the worst happens and exclusions reduce the coverage you thought you had.
Be sure to know when a policy ends. The policy may reach its end when:
General liability insurance for contractors does not cover a contractor’s property. You’ll need a builder’s risk insurance policy.
A general liability insurance policy offers coverage if you are responsible for causing injury or property damage to someone else. It also pays associated legal fees.
As for damages, general liability insurance for contractors protects against fire and explosions that causes damage to someone else.
A general liability insurance policy for contractors will typically cover:
For those in the construction business, having both builder’s risk and liability insurance is a smart move.
Source – Forbes.com