When Does a Builder’s Risk Policy Provide Coverage

Builder’s risk insurance is not always necessary. However, it can provide some much-needed peace of mind during any construction process. If you are unsure if this is the right coverage for your needs, there are a few key things to keep in mind about it. Work with your agent to determine how well builder’s risk insurance applies to your situation. Here are a few details.

What Is Builder’s Risk?

This type of insurance is specific for properties under construction. It is sometimes called Course of Construction insurance.

It applies only through to the completion of the work on the property, when the owner can start to use the property. What makes it unique is that it is very versatile.

Every project is different. That is why most builder’s risks insurance covers different risk factors. That can make knowing when your policy applies a bit difficult. However, your agent can answer all of your questions based on the terms within your policy.

Most of the time, this type of insurance covers losses related to the property for instances such as:

• Lightning strikes
• Fires
• Explosions
• Hurricanes/tornadoes (or other severe weather)
• Theft
• Vandalism
• Hail damage

In some situations, there are exclusions on the policy. For example, in most high-risk areas, this insurance does not provide flood insurance. Earthquake damage may also have limits. If the policy does have an exclusion like this, you may be able to get an extension or add-on policy that can cover that risk. In high-risk areas, that can be important.

The policy covers a great deal of components during the construction process. Again, verify coverage within your policy, but most policies cover:

• The structure itself that is under construction
• The materials used for that project on the job site
• All supplies on the job site
• The equipment on the job site
• All equipment, materials, and supplies that are in transit to the location or stored at a temporary location specifically designated for this project.

In some cases, you can extend this further to include losses related to:

• Rental income
• Interest on your real estate loan
• Other costs you have due to the property’s construction stopping due to a covered peril
• You may wish to include coverage for scaffolding, temporary structures, and debris removal as well.

What works for your needs is going to be unique to your project. Your agent can help you choose the right protections in every case.

Also Read:  The Importance of Workers’ Comp to Your Employees