Builders Risk Insurance Vs. Liability Coverage: How Each Benefit Works

For construction contractors, there is nothing more important than safeguarding your works in progress. After all, if something were to damage the property and interrupt your progress, then you might face a huge financial setback. At this point, it’s critical that you have builder’s risk insurance ready and waiting. Your policy will be there to assist you following property damage at construction sites. 

However, your builder’s risk policy will not offer the same coverage to injuries or property damage that you cause to other parties. In this case, separate liability insurance benefits will provide the necessary benefits. Though separate from your builder’s risk policy, liability coverage is equally important. Let’s take a closer look at how these benefits work. 

What does builder’s risk insurance cover? 
Builder’s risk coverage will pay for unexpected, unavoidable hazards occurring in property under construction. Some of the incidents covered by your plan might include: 

• Theft and vandalism
• Certain weather-related hazards, such as hail and lightning
• Fire and explosions 

Your policy will cover the structure under construction, equipment housed at the work site, and materials that have yet to be installed on the project.  

However, if you were to cause harm to someone else involved in the project, your plan will not pay for their losses. Instead, you will need to turn to a benefit known as general liability insurance. This policy might cover third-party losses like: 

• Injuries on your property
• Acts of negligence caused by the contractor 

When it comes down to who is responsible for paying for damage done to someone’s property, negligence is often the deciding factor in whether you use builder’s risk insurance or liability insurance. 

Negligence is a major concern in construction. After all, if you make mistakes in your work, then you could wind up causing your client a lot of harm (even if you didn’t intend to do so). Still, if you are responsible for harm done to someone else, then you can expect to turn to your general liability insurance as opposed to your builder’s risk policy. 

All in all, builder’s risk insurance is designed to cover damage to a construction project that is under your authority. However, liability insurance extends to losses that affect others, and are your business’s fault. 

If there are any major exclusions that leave you with gaps with which you are not comfortable, additional insurance can be purchased to cover most of these risks. There is a lot at risk in a construction project, and adequate coverage is of vital importance.