Planning for what if: Your guide to purchasing Builders Risk Insurance.
Insuring yourself correctly when building a structure from the ground up or even just doing minor remodels can mean the difference of maintaining financial stability or falling into financial ruin. The common person is not always familiar with what to look for in this type of policy and often gets overwhelmed and chooses to forego coverage which can be a devastating mistake. This is something that only happens to a rookie first time builder or home owner something that seasoned contractors know firsthand of what NOT to do.
Considering the many things that can befall your project during the course of construction it is pertinent to know your cost both hard and soft so that your policy accurately covers them. Experienced builders have much more familiarity with these types of policies and can really help guide you in the right direction so that no additional financial burden befalls you. Something to consider are when electing proper coverage are:
- Insurance limits and deductibles
- Additional coverage available such as wind and hail, hurricane and storm
- Ratings of an Insurance company
- Coverage specifically for foundation cracks and shifting
- Payment options such as paid directly or through an escrow account
- Basic policy inclusions in different policies
- Policy exclusions such as mold, pollution, settling, insect or rodent damage etc.
- After policy construction issues such as defects or warranty issues
Most policies come to term when the project has come to completion however some insurance companies vary on what they consider completed. For example if there has been a fire after the building has been completed but there has not been a certificate of occupancy issued. One could argue that technically it is not completed as there has not been an official walk through and could have been denied thus rendering the building incomplete. If there was a prior agreement made on what percentage makes the project complete this can affect an insurance claim. If the property has been occupied partially or fully while under construction this can void certain terms. This has always been a source of contention between policy holders and insurance companies. You must understand the terms clearly so that if something should happen, you do not find yourself in the middle of an empty lot and even emptier pockets because your coverage ended without having the next policy in place.
All in all you must begin your project knowing all the many parts of what makes up your structure and thoroughly understanding the type of policy you may need, will save you money and headaches should anything go south. Small investment on this short term policy is worth the small price you pay in comparison to the large loss you will incur without it and remember like many things in life you do get what you pay of or in this case what you don’t.