Homeowners Coverage vs Builder’s Risk Insurance

Are you familiar with Builder’s Risk Insurance yet? This is a type of insurance for your small contractor business. In this article, we’ll look at why you will need Builder’s Risk coverage when renovating a home.

Here’s the short answer. Your client’s Homeowners coverage will not protect their home during the course of construction.

The good news is that you don’t have to carry the financial risk that comes with a building renovation. Course of construction insurance is available.

So, what is the difference between the two? In a nutshell, Homeowners insurance covers an existing residence while Builder’s Risk insurance protects a home under construction or renovation.

Builder’s Risk insurance coverage

Builder’s Risk insurance for your small contractor business protects buildings and structures while they are in the process of being built. It also covers other types of property. For instance, building materials, tools and equipment, fixtures, foundation, and fencing. It may surprise you that it even includes landscaping, for example lawn, trees, and paved areas.

Building materials and equipment covered can either be on the construction site, in storage at a different location, or in transit.

The coverage typically protects your construction or renovation project from property damage. 4 Common causes include, but are not limited to:

1. theft,
2. vandalism,
3. fire, and
4. weather.

However, natural disasters, such as windstorms, earthquakes, and floods, are often not included in the policy.

Builder’s Risk insurance is also for soft costs coverage. This is a great benefit. It helps cover expenses incurred if your project is delayed. By adding onto your policy you can cover your business for project delays.

Homeowners insurance coverage

Homeowners insurance, like Builder’s Risk, is a form of property insurance that protects you from financial losses in the event of damage to the building under construction. However, Homeowners  will not do the same job as Builder’s Risk insurance for your small contractor business

The policy typically includes:

• Dwelling coverage: This helps pay for the rebuilding and repairing of the home, as a result of damage caused by fire, wind, hail, and lightning. Damage from floods or earthquakes is usually excluded from a standard Homeowners insurance policy.

• Structure coverage: provides insurance coverage for other structures on the premises such as a detached garage, tool shed, swimming pool, and fencing.

• Personal Property coverage: protects your client’s items, such as furniture, clothing, and electronics.

• Loss of Use coverage: reimburses for additional living expenses incurred, up to policy limits, if a covered loss makes the home temporarily uninhabitable while being repaired or rebuilt.

• Personal Liability coverage: this protects you against legal claims. It can help pay your attorney fees, damages if held liable, and medical costs should a person be injured.

Insurance for your small contractor business 

At Builder’s Risk Insurance company, we help you find insurance for your small contractor business and advise on the correct coverage that best suits your needs and budget. Save time and money by talking to one of our agents today at 877 960 0221. We get quotes from leading insurance carriers.