The Builder’s Risk Insurance Policy That Protects Your Profits

A Builder’s Risk Insurance policy is specifically designed coverage to protect structures and buildings during the course of construction. This includes those that are being built from ground up, renovated or remodeled.

With Builder’s Risk, your contractor business is protected not only against financial loss from property damage on a construction site, but also the soft costs that can eat into your profits.

3 Dangers that threaten your profit

Profit is what is left over after paying all of the bills and costs associated with your construction project. Your profit is threatened by 3 unexpected causes. Are you prepared for any or all of these dangers?

1. Business interruption:  Penalties and fines arising out of unexpected project delays
2. Property damage: Replacement and repair costs arising out of damage to the property during the course of construction
3. Theft: The cost of replacing the materials, tools and equipment you are using for the project.

What is at stake?

Insurance is designed to protect you from the impact of financial loss. The result of not protecting your construction business from property damage can be so great that you could lose your business, your livelihood or your home.

For instance, your contractor profits can be negatively impacted by any of these:

• The cost of repairing damage to existing buildings and structures while you are renovating, remodeling or installing equipment (for example HVAC)
• The cost of re-erecting scaffolding that has fallen
• The cost of project delay penalties and fines

Is every Builder’s Risk Insurance policy the same?

As with most insurance coverage, a Builder’s Risk Insurance policy comes with several coverage options. You can purchase a standard policy or you can purchase additional coverage that fits the risk profile. Generally, Builder’s Risk coverage includes:

1. Theft
2. Fire
3. Hail, lightning, hurricanes, tornadoes
4. Explosion
5. Vandalism

Every policy is different

Because no two construction projects are the same, no two policies should provide the same coverage. Here are some areas of coverage might be added:

• Changes in building law or ordinance can impact your profit. This coverage reimburses the insured for costs incurred to upgrade to new building codes.
• Changes in green environmental standards can force you to upgrade your construction to comply.
• Not all areas have coverage for wind damage, particularly projects in coastal areas. Be sure to check your policy regarding this exclusion.

What about soft costs?

So your Builder’s Risk can include coverage for construction materials and equipment added to the property, like elevators and HVAC systems. It can also provide coverage for the replacement or re-erection of temporary structures such as scaffolding or fencing.

A delay in the construction project can result in mounting soft costs. Be sure to evaluate the risk of incurring the following, and to include the ones you need into your coverage.

• Bond and permit fees
• Legal and accounting fees
• Real estate taxes
• Additional interest (both on construction and permanent financing)

Invest in a Builder’s Risk Insurance policy

A contractor faces threats to profit on every construction project. This goes beyond the financial losses that come from third-party claims.  Find out how to protect your contractor business’s profits. Speak with the agents at Farmer Brown insurance. Call (888) 973-0016