Builders Risk Insurance Protection vs Contractors Liability

Builder’s Risk insurance protection is used by many contractors to safeguard their sites during construction. Construction site fires lead to an estimated $35 million in property loss yearly. Yet that is not the only risk that your construction site faces.

When getting insurance, you need to understand the limits of each policy so you can get adequate coverage. Different insurance policies cover different types of risk. Contractors Liability Insurance can offer your business some much-needed cover that builder’s risk insurance doesn’t offer.

In this article, we explore some of the key differences between the two policy covers.

Builder’s Risk insurance protection

This policy covers your insurable interest in materials, fixtures, and equipment during the renovation or construction of buildings and structures. If the items are lost or damaged, your insurer will take over the financial burden of replacement as long as the loss is covered.

The policy coverage includes:

1. Damage caused by natural weather conditions

Construction sites have little or no protection against weather elements. Builder’s risk covers damage from floods, wind, hail amongst others

2. Damage caused by vehicle or aircraft

It is not unheard of that a truck can veer off the road and end up in the middle of your construction site. If you are insured, the insurer will cover the cost of damaged material, destroyed equipment, and cleaning up.

3. Theft and vandalism 

Construction site theft of materials and equipment costs the construction industry an estimated $1 billion a year. Additional costs due to vandalism inflate this number and affect your finances.

Extension policies

Builder’s Risk insurance protection can accommodate additional covers such as debris removal, loss of profit, property replacement, theft, or damage of equipment both onsite and in transit, and damage to temporary structures.

Contractor’s liability insurance

Contractor’s liability insurance protects your business from liability arising from third-party bodily injury or property damage caused by a contractor or third-party, such as engineers, architects, and other vendors. Unlike Builder’s Risk insurance protection, it offers no protection for a building under construction or renovation.

It covers:

1. Third-party property damage claims

If any of your business activities result in the damage of a third party’s property, you will be held liable. Say a wall collapses into a neighbor’s car, insurance will cover the financial costs related to the damages.

2. Third-party injury claims

The policy covers injury claims associated with your operations or products such as medical costs and loss of wages.

3. Advertisement mistakes

This policy covers the cost of liability lawsuits resulting from your advertisement campaigns.

Risks of underinsurance.

Most contractors pick one policy over the other leaving their businesses exposed. This means that they have to pay for damages, replacements, and medical expenses. Being underinsured causes financial strain. It can also lead to penalties, fines, and even get your license revoked due to non-compliance.

Now you know about Builder’s Risk Insurance Protection

Both Builder’s Risk Insurance Protection and Contractors Liability insurance have their benefits. It is prudent to get both. Get in touch with Builder’s Risk at 877 960 0221 to secure your business.