Builders Risk Insurance
Builder’s Risk insurance is a property policy designed to provide coverage for property while under construction. It covers the contractor’s interest in materials at the job site before they are installed, materials in transit intended for the job and the value of the property being constructed until it is completed and accepted by the owner.
Disclosure: This information is provided for general purposes only, and it is not intended to be an advice nor the norm. For accurate information suited to your situation, you must contact an insurance agent or a property and casualty risk manager.
I hope the following information will help you. It will provide generalities of coverages provided by a Builders Risk policy. Please keep in mind that policies will very depending on the state and the carrier for each carrier has specific proprietary products.
In general, Builders Risk covers property and it is particularly designed for construction projects, unlike policies for vacant homes or homeowner policies. Further, unlike other home policies, it does not provide liability coverage, unless a specially designed product by XYZ carrier.
Liability coverage is separate. It can be part of a package policy, an endorsement, or a stand-alone policy. In any event, if you are in this business you should have some form of liability coverage, whether through a business or personal policy. Always, check with your contractor if they have insurance and what type of insurance.
I always have my contractors sign waivers regarding Worker’s Compensation and materials (I am not responsible for their loses) Moreover, check with your agent what the underwriting guidelines are for the specific carrier. There are some carriers that do not insure the property if undergoing major structural changes, especially foundation work. Builders Risk Insurance covers or protects against loss to buildings or structures in the course of construction, including materials incidental to construction.
Builders Risk insurance is a property policy designed to provide coverage for property while under construction. It covers the contractor’s interest in materials at the job site before they are installed, materials in transit intended for the job and the value of the property being constructed until it is completed and accepted by the owner. The policy may be written to cover the whole structure for new construction or rehabilitation projects. It can also be used to cover specific projects such as a new room addition, a deck, or a remodeled kitchen.
- The policy is flexible enough to be used either for a one-building project or on an ongoing reporting basis for a project, which includes multiple buildings (check with your agent).
- The policy includes coverage for soft costs, such as additional property taxes, and interest costs, which result from a loss.
The following coverages might be included at no additional cost or they might be endorsements depending on the insurance carrier:
- The loss of business income
- The cost of replacing lawns, trees, shrubs and plants
- The cost of replacing specifications, plans and blueprints
- The cost of removing debris of covered property after a loss
- The loss of property in transit to the construction site
- The loss of property at a temporary storage site
Within the limits of insurance stated in the policy, coverage includes any increase for loss resulting from any law or building ordinance-regulating repair or construction.
- The policy covers theft of building materials at the job site.
- Damage to glass is covered – including damage caused by vandalism.
- Losses will be paid based on what it would cost to repair or replace the damaged property with property of like kind, quality, and use.
- Coverage does not cease until the property is sold or accepted as complete by the purchaser, or the policy expires, whichever occurs first. Coverage ceases immediately if the policy is canceled.
- Coverage for the contents of model homes can be added to the policy for an additional premium.
I hope this helps!