Also known as Course of Construction, a Builder’s Risk policy provides you with unique property insurance coverage. The policy not only covers the building under construction but the contractor’s property and equipment during the construction process.
It offers protection to anyone with a financial interest in an ongoing construction project, and best of all, you can get a policy for as little as 1% of the construction costs.
Persons requiring Builder’s Risk insurance are:
So, even if you are not the contractor, you should get Builder’s Risk insurance for the project.
Builder’s Risk insurance is a diverse property insurance product that covers three construction facets:
You’re better off covering both the structure and installation, whether you’re putting up a new build or renovating. By doing so, you are providing coverage for damage to your tools, be they stored on-site, or in transit to the job site.
When you have a Builder’s Risk policy in place, your insurer will compensate you for any property damage caused by:
You can extend your coverage to include construction firms, on-site scaffolding, and temporary structures.
Builder’s Risk policies do come with several limitations and exclusions. Common exclusions include:
Note: A Builder’s Risk policy does not cover damage resulting from defective design, shoddy workmanship, or use of inferior materials. You would require Professional Liability insurance to cover these risks.
A Builder’s Risk policy offers tailor-made coverage to project owners, so the cost will correspond to how much protection you require. The project’s budget, type of project, construction materials, type of coverage, and the policy’s exclusions will significantly influence insurance costs.
Typically, premiums will range from 1% to 4% of the anticipated cost of construction. For example, risk coverage for a construction project worth $250,000 will carry a premium of between $2,500 to $10,000. If the construction project is likely to lead to financial inconveniences, you should opt for a policy that offers soft costs coverage.
The coverage provided by this policy makes up for the loss of sales revenue, rental income, real estate taxes, and higher interest loans when renovating a building.
Since risk insurance is a fully earned policy, coverage its assessed pro-rata to let you pick one that suits your project requirements. The policy is available in terms of 3,6 or 12 months.
A fully earned premium means you’re not entitled to a refund if you complete the project ahead of time. For instance, if you purchase an annual policy and complete the project in eight months, the insurer won’t refund any money.
You don’t have to incur additional expenses to obtain new coverage if a contractor doesn’t deliver a project on time.
Purchasing a comprehensive Builder’s Risk insurance ensures the construction work flows and sets the stage for speedy delivery. For your own protection, call Builder’s Risk (877) 960-0221.