Property Replacement Insurance for your Building Project

Choosing the right insurance to cover your construction project is never an easy task. With so many policies to choose from, it can quickly become an overwhelming and frustrating experience.

In this article, you will find out why it pays to invest in Builder’s Risk insurance, also known as Course of Construction insurance and why it plays such a vital role in minimizing your risks.

Why a Builder’s Risk policy?

Specifically designed to provide coverage for the construction needs of residential and commercial customers, this policy forms the core of your risk management program.

Construction is a risky business at the best of times and having the correct coverage in place to see to all those unplanned mishaps makes good business sense.

A policy that’s aligned to your project

Generally, the most common types of construction projects covered include:

• Residential new construction
• Residential remodeling or smaller projects
• Model homes and model home contents
• Commercial property construction

Don’t forget, if you have a unique build, your best course of action would be to speak to one of our agents at Farmer Brown Insurance.

Who needs this insurance?

Traditionally the owner of the project would secure Builder’s Risk insurance. The custom builder, general contractor, sub-contractor, architect, and lender funding the construction works; in fact, anyone with a vested financial interest in the project should also obtain this insurance.

Note: A Builder’s Risk policy may be necessary to show proof of insurance to comply with local city, county, and state building codes and is often a condition attached to contracts.

Secure your build from the start

Builder’s Risk insurance provides coverage for buildings and other structures while construction takes place. Usually, you will be offered coverage for property damage relating to:

• Foundations
• Building materials
• Temporary structures such as scaffolding
• Lawns, trees, and plants installed by the builder

 Add to your policy if needed

The most basic Builder’s Risk insurance offers coverage for project damage resulting from:

• Fire
• Weather
• Vandalism

If, for example, your build is in an area known for flooding, the onus would be on you to obtain this additional coverage. It will be in your best interest to discuss this matter with one of our agents about what events you want coverage for.

Limitations on this type of policy

Builder’s Risk policies do come with several limitations, and it is essential you are aware of them.

• The insurance will not cover the property of others
• Subcontractors are required to have their own insurance
• There is no coverage for tools or equipment unless this is specifically added
• There is no coverage for professional liability
• It does not cover accidents at the job site

 What sort of cost is involved in Builder’s Risk insurance?

Premiums typically range from 1% to 4% of the construction spend, so the cost will correspond to how much protection you require. Other items that will influence your insurance spend are:

• Additional coverage, if required
• Project budget
• Type of project
• The material used for the construction

As a Builder’s Risk policy is specifically tailored to your project needs, it would be well worth your while investigating the benefit of adding soft cost coverage. This makes up for the loss of rental income, sales revenue, real estate taxes, and higher interest loans.

Unlike many other insurances, the policy can be purchased in terms of 3, 6, or 12 months and allows for one extension if required.

Invest in insurance that has your back

At Builders Risk Insurance company, we take the sting out of your property damage insurance requirements. Call Builders Risk at (877) 960-0221 where one of our agents is standing by to assist you.