Construction Insurance is the overall name for insurance policies that protect property owners and contractors from financial loss during construction. Depending on the construction specifications, you may require different types of coverage.
Builder’s Risk insurance, also called Course of Construction, is coverage for buildings and structures that are being built or renovated. In part 2 of this 3 part series on the Construction Insurance, we will discuss:
Policy premiums for this Construction Insurance usually range between 1% and 5% of the total construction costs. With BuildersRisk.net the standard rate is about $200 to $500 per $100,000 of construction costs. But this is assuming your project site is not within 50 miles of the coast.
You can offset your insurance premiums through deductibles. A deductible is a specific amount you pay out of pocket toward an insured loss. Therefore, the higher your deductible, the lower your premium costs. Since every construction project is different, no two policies are alike. This is why it’s so important to talk to our insurance agents about the specifics of your project. We can then give you accurate rates and the best coverage.
As a policyholder, you are responsible for the monthly premiums and deductibles.
Builder’s Risk is a Construction Insurance which covers the total construction costs. That is, all labor and materials costs, excluding land value. Coverage can also be extended to include the project’s soft costs, which typically make up about 30% of the overall construction costs. Soft costs include legal fees, architectural fees, real estate taxes, permit fees, financing, and lease expenses. Having soft costs included in your coverage increases the cost of your Construction Insurance.
Policyholders – usually the property owner and general contractor – should ensure that the soft costs endorsement includes soft costs that will be incurred by both parties. If a property owner obtains the policy, some endorsements may only focus on the owner’s soft costs and vice versa. Therefore, all the insured parties should discuss in detail the scope of the soft costs coverage beforehand.
Other than your coverage limit, which is the total value of your completed project, underwriters consider other factors when pricing policies. These include:
Although Builder’s Risk insurance is not required by law, it is required in most contractual agreements. For more on your Construction Insurance coverage, and to get an instant quote, call BuildersRisk.net at 887 960 0221. Our agents will walk you through different policy options until you find one that’s suitable for your business.