Builders Risk Insurance Coverage: What You Need to Know

by

Building projects come with a lot of risks. From natural disasters to theft, there are a lot of things that can go wrong during the construction process. That’s where builders risk insurance comes in. Builders risk insurance is a type of coverage that can protect you from financial losses during construction. In this article, we’ll take a close look at what builders risk insurance is and what it covers.

Table Contents show

What is Builders Risk Insurance?

Builders risk insurance, also known as course of construction insurance, is a type of property insurance that covers buildings while they are under construction. This type of insurance can provide coverage for a wide range of losses, including damage from fire, theft, vandalism, and natural disasters. Builders risk insurance policies can be purchased by builders, contractors, and developers, and can be tailored to meet the specific needs of each project.

Builders risk insurance policies typically cover the following:

Coverage
Description
Property Damage
Covers damage to the building or structure being constructed
Materials
Covers loss or damage to building materials and supplies
Equipment
Covers loss or damage to construction equipment and vehicles
Soft Costs
Covers indirect costs associated with construction delays, such as additional loan interest and advertising costs
Debris Removal
Covers the cost of removing debris from the site after a covered loss

It’s important to note that builders risk insurance policies do not cover liability claims. If someone is injured on your construction site, you’ll need a separate liability insurance policy to cover those costs.

Do You Need Builders Risk Insurance?

Builders risk insurance is not a legally required insurance policy, but it’s a good idea to have one if you’re involved in a construction project. The costs of construction delays and property damage can quickly add up, and builders risk insurance can help protect you from financial losses.

It’s important to note that builders risk insurance policies are typically purchased by the builder, contractor, or owner of the property being constructed. If you’re a subcontractor working on a construction project, you may not need to purchase builders risk insurance, but you should talk to your employer to make sure you’re covered.

What Does Builders Risk Insurance Cover?

Builders risk insurance policies can cover a wide range of losses, including:

  • Fire, lightning, and explosions
  • Wind, hail, and other weather-related damage
  • Theft and vandalism
  • Water damage from accidents or leaks
  • Debris removal after a covered loss

It’s important to note that builders risk insurance policies do not cover losses that are not related to the construction process. For example, if a building catches fire after construction is complete, the damage would not be covered under a builders risk insurance policy.

How Much Does Builders Risk Insurance Cost?

The cost of builders risk insurance can vary widely depending on a number of factors, including the size and scope of the project, the location of the construction site, and the type of materials being used. On average, builders risk insurance can cost between 1% and 5% of the total construction cost.

Builders risk insurance policies are typically purchased for the duration of the construction project. Once the project is complete, the coverage ends, and the property owner will need to purchase a different type of insurance policy to cover the completed building.

FAQs

What is the difference between builders risk insurance and general liability insurance?

Builders risk insurance and general liability insurance are both important types of insurance coverage for construction projects. Builders risk insurance covers property damage and loss of materials during the construction process, while general liability insurance covers bodily injury and property damage claims that arise from accidents on the construction site.

Do you need builders risk insurance for a residential construction project?

It’s a good idea to have builders risk insurance for any construction project, including residential projects. Even small residential construction projects can be expensive, and builders risk insurance can help protect you from unexpected financial losses.

Can builders risk insurance cover construction delays?

Yes, builders risk insurance policies can cover certain types of soft costs associated with construction delays. These costs can include additional loan interest, advertising costs, and other indirect costs that arise from construction delays.

What should you look for in a builders risk insurance policy?

When shopping for builders risk insurance, it’s important to look for a policy that provides the coverage you need at a price you can afford. You should also look for a policy that is tailored to meet the specific needs of your construction project, including the type of materials being used and the location of the construction site. It’s a good idea to work with an experienced insurance agent who can help you find the right builders risk insurance policy for your project.

Conclusion

Builders risk insurance is an important type of insurance coverage for any construction project. Whether you’re building a small residential home or a large commercial building, builders risk insurance can help protect you from unexpected financial losses. If you’re involved in a construction project, be sure to talk to an experienced insurance agent to learn more about builders risk insurance and to find the right policy for your needs.

Rekomendasi: