PROTECTING PROJECTS:
BUILDERS RISK INSURANCE
Who needs, how it works and how much costs.
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What is Builders Risk insurance?
Builders Risk Insurance is specially designed to protect buildings and structures that are being built or renovated. Not only does it cover the cost of construction additionally covers the equipment used at the project. Builders Risk Insurance can include protection for materials, equipment added to the property, such as elevators and HVAC systems, labor costs and expenses, as well as temporary structures such as scaffolding and even landscaping.
Who needs Builders Risk insurance?
This depends on who will perform the construction. Will the owner be the GC (General Contractor), or will they hire a GC? These are the two most common situations. In both positions, the owner or the GC should obtain a Builders Risk Insurance. Where there is a lender, they will require coverage before the loan is funded. The coverage will name the lender as an additional insured in case of a loss.
Ground-up
New construction
Rehab
Remodeling of a building, either structural and/or cosmetic work.
What is covered by a Builders Risk Insurance?
In addition to the materials, a Builders Risk Insurance also helps to cover the following items:
Debris Removal
The cost resulting from cleaning up debris after a construction accident can be enormous. Builders Risk Insurance will cover those costs up to the amount listed in the policy.
Property Replacement
The most important coverage Course of Construction Insurance provides is replacement cost equal to the value of the property lost. Having the right valuation for the project is extremely important.
Building Ordinance or Law
Building codes can change a great deal from the start of the project through its completion. In the construction project and causes a delay or loss in profits, Course of Construction Insurance will help cover that loss.
Contamination Cleanup and Removal
When a fire or other covered cause of loss occurs at the project site, pollutants may be released causing damage to land and/or water; Course of construction Insurance will cover you from these events.
Valuable Papers and Electronic Data
Contractors use blueprints, schematics, and other paper and electronic documents and data in the course of conducting their business. Builders Risk Insurance can restore and replace important documents and electronic data that were lost in a covered risk.
Profit
Builders Risk Insurance covers more than just labor, materials and equipment that are needed for new construction project, it can cover profits as well. General Contractors can be reimbursed for a percentage of profit earned as of the date of the loss.
Temporarily Stored Material or Equipment
Contractors will often store important expensive material and equipment off-site that will be used in the course of the project. With Builders Risk Insurance these items will be cover while they are in storage or in transit to the job site.
How it works
This depends on who will perform the construction. Will the owner be the GC (General Contractor), or will they hire a GC? These are the two most common situations. In both positions, the owner or the GC should obtain a Builders Risk Insurance. Where there is a lender, they will require coverage before the loan is funded. The coverage will name the lender as an additional insured in case of a loss.
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How much does Builders Risk Insurance cost?
We work with the TOP 3 companies that represent 80% of the market for Course of Construction Insurance. Our alliance with these carriers guarantee better rates for your policy; However, on average, the Builders Risk Insurance policy cost ranges anywhere from 1% to 5% of the total construction cost.
The exact cost depends on the following factors
Cost of the Project
This will be the single most important item in determining your cost. The following factors will also play a role in your final cost.
Type of Construction
Frame structures are more susceptible to fire and wind damage than masonry or metal constructions and, therefore, more expensive to insure.
Geographical Location of Project
Projects on the coast are subject to a greater risk of loss from hurricanes, wind, and flooding than inland locations. Accordingly, these policies will be more expensive. FEMA has a map of high-risk areas.
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