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For most people and businesses 2021 was a horrible year. We are all glad that it is over. However, what does 2022 have in store for your New Home or Commercial Construction Business? To cover all your bases you need a broad new home or commercial property construction builders risk insurance policy. This is a crucial part of any plan to protect your interests from unexpected losses.
At this point we can only hope for the best and plan for the worst. You do need to plan now to protect your business. I will give you five tips that will allow you to meet this goal in the following few paragraphs. Finally at the end of this article I will disclose a few random thoughts about low cost New Construction Builders Risk Policies that you should find very useful.
If you are involved in New Home Construction or New Commercial Construction, you need to have an affordable Builder’s Risk Insurance Policy. It is also sometimes called Course of Construction Insurance.
The next few paragraphs will contain information and tips that will allow you to make informed decisions when you are purchasing a low cost Builder’s Risk Insurance Policy.
1.What Do You Want Covered?
You should have some sort of game plan on exactly what you want covered. Keep in mind the more things that are covered the more the premium will be. Remember certain things may be covered under your general liability insurance policy or inland marine coverage. There is no benefit of paying twice for coverage. You will not be able to collect from both policies. Also the insurance company will more likely than not refund any premiums that you have paid for duplicate coverage.
2.Ask Your Agent Questions.
It is very important to ask your agent questions. Nobody knows your business better than you. It is important to ask what exactly is covered and what is not to avoid nasty surprises in the event of a loss. At the end of the day getting the proper coverage with an affordable New Home Construction Builder’s Risk Insurance Policy comes down to you being knowledgeable and asking the right questions.
3.Shop around.
Shopping around for a low cost New Construction Builder’s Risk Insurance Policy is a must. This can be a time consuming process to do on your own. If you choose BuildersRisk.Net they will save you the hassle of shopping around. They are experts in the field and will shop your policy for you. They use all the major carriers and will be able to get you at least 3 different quotes in a matter of hours. This process done on your own could take take days or even weeks.
4.Deductibles
Just like any other type of insurance policy, Affordable New Construction Builder’s Insurance has a deductible. You should always ask your agent to get you a quote using at least 2 or 3 different deductible amounts. This will give you enough information to weigh the possible insurance savings versus your out of pocket expenses in case of a loss. The amount you choose will be up to you and how risk averse you are.
5.Valuations.
The value of the project is one of the greatest factors in determining the premium. This is where your personal expertise comes into play. No matter how good or experienced your agent is they really have no way of accurately determining the valuation of your project. Further in 2021 building material prices have increased at a record rate. Supply chain problems and labor shortages have further caused massive price increases.
If your costs have increased significantly from your original estimate you should contact your agent immediately. An endorsement to the policy can be made increasing the values. You just need documentation showing the increase in cost. Most of the carriers will just increase the premium for the increased valuation.
It is also important to note that if the project has been delayed, you make sure to extend the term of the policy before it lapses. It is relatively easy to extend the policy when the policy is still in force. It can be very difficult to reinstate coverage if you let the policy lapse.
How has COVID-19 affected your projects? New Construction Builder’s Risk Insurance policies cover a wide range of losses for construction projects. They cover most events unless they are specifically excluded. Most policies include coverage for hard costs, soft costs, and labor, among other things. The COVID-19 pandemic may affect one or more categories of loss under a New construction Builder’s Risk Insurance Policy. Coverage might also be claimed under the governmental authority clauses applicable as well. Your policy should be reviewed if actions as a result of COVID-19 measures have affected the work on your project.
COVID-19 is a real catastrophe. Whether it is physically present at or near your construction project you may have incurred losses. If your policy does not mention the word “virus,” an insurance company will be in a difficult position in trying to avoid coverage for COVID-19-related losses.
Random Thoughts on New Construction
Builder’s Risk Insurance Policies
Policy Term- Builder’s Risk Home Building Insurance Policies differ from most other types of insurance policies in the length of the policy term. In most instances you can pick your term from 1 to 12 months. This is different from most policies that are annual. Two things are important to remember.
- The shorter the term the lower the premium will be.
- If your project is not going to be complete by the end of the term, you need to contact your agent and get an extension. This should be done before the policy term expires.
“One Shot Policy”
-This means that if you purchase a policy for a term of 6 months and you finish in 5 months you will not get a refund of any of the premium you paid.
Inland Marine Insurance- Builder’s Risk Insurance can also cover the materials, tools and equipment used to work on a project while they are in transit or temporary storage. When this occurs it can overlap with your inland marine coverage. If you do not have inland marine coverage and you experience a loss your policy may provide coverage for losses occurring at the project location or temporary storage site.
