2 Ways Builder’s Risk Insurance Is Not For Third-Party Liability Claims

When it comes to insurance coverage, no one policy protects your contractor business from all the risks you will face in the course of doing business. Each policy has a specific focus. However, an umbrella program like Contractors Insurance, can include many policies to give you more comprehensive coverage.

It is common (and highly recommended) that your Contractors Insurance includes General Liability Insurance. Should it also include Builder’s Risk? The answer is, maybe. Let’s see why.

What is a third-party liability claim? 

Two of the most common risks faced by contractors are property damage and bodily injury. In both of these instances, it may not be your fault, however, you’re held liable.

• Property damage claims:

This is damage to a client, visitor or any other person’s stuff. If it results from the actions of you or any of your employees during the course of work, then your business is liable. You will have to pay damages for property replacement or repair, as well as legal costs. This is likely to be expensive and result in significant financial loss for your company.

• Bodily injury claims:

Once again, this has to do with a client, visitor or any other person. Should they sustain an injury (fatal or otherwise) as a result of your work or your work site, your business will be held liable. The liability claim will include medical expenses.

General Liability insurance

Your General Liability insurance is designed to protect your contractor business from third-party liability claims, like those mentioned above.

However, General Liability does not protect your business from damage to your own building project and the financial loss that comes with it.

Builder’s Risk Insurance

Builder’s Risk insurance differs from General Liability in several ways. For instance:

1. Builder’s Risk is per-project coverage. The policy covers a specified construction project for a specified period and for specified risks to the project. General Liability coverage is day-to-day protection which goes with you from site to site. You can work on several projects, and you will be covered for them all. So, if any of your clients bring a claim against you for property damage, your General Liability will step in. However, Builder’s Risk is only for property damaged on a particular project.

2. Builder’s Risk provides coverage for the building materials, equipment and tools used on the covered project. This includes those specified for the project while in temporary storage or in transit. Sometimes damage occurs to building materials before they get to site. How does this kind of property damage claim differ from other property damage claims, and why doesn’t Builder’s Risk cover both?

Property damage that is covered by Builder’s Risk is not damage to a third-party’s property. It is coverage for property damage to things like:

• Scaffolding
• Vandalism
• Theft
• Fire
• Falsework
• Construction material

Do you need Builder’s Risk for third-party liability claims?

As you can see the answer is, no. However, this coverage will protect your business from property damage to your building materials, building equipment and tools, or the structure itself during the course of construction. To find out more about the value of this coverage, contact us at Builder’s Risk.