Who Need Builder’s Risk Insurance?

If you own a building or run a general contracting business, you may need to buy builders risk insurance. It helps to safeguard the structure of a building during the construction phase. Find out what types of buildings this insurance covers and who would benefit the most from purchasing it. Your insurance agent can help you walk through the policy options that work best. 

What Is Builders Risk Insurance? 

This insurance technically falls under property insurance. It’s available for buildings undergoing construction, and often lasts only for a short time. The policy starts on the effective date and terminates as soon as work on the building finishes. 

Just as every construction project has its own characteristics, each builders risk policy has unique features. Typically, it covers damage that occurs from unavoidable, unexpected hazards on the property. Events such as lightning, fire, theft, vandalism, wind damage and the like often qualify for coverage. 

What Are Some Common Exclusions? 

Floods and earthquakes typically do not receive coverage under builders risk insurance. Neither does wind if you build along a beach, in some cases. However, some insurers offer extended coverage. Coverage for floods and earthquakes are often available if someone desires to buy it. 

Further exclusions might extend to employee damage, acts of terrorism, corrosion and faulty design and poor workmanship. Simple wear and tear do not qualify either. Builders risk insurance also excludes damage due to shoddy materials. 

What Types of Property Does Builders Risk Cover? 

Most builders risk policies protect the building and other structures. It also pays for supplies, materials and equipment in transit or on-site. Some insurers may offer additional coverage for losses caused by project delays. These include rental income, real estate tax expense and lost sales. Basically, it minimizes the risk of financial loss during construction. 

Some contractors need the coverage to extend to construction forms, scaffolding and temporary structures. There are even options that cover the cost to remove pollutants from the site. A knowledgeable agent can walk you through the details of each policy. They can help you determine how builders risk insurance can cover your construction project. 

Who Needs Builders Risk Coverage? 

Property owners, the construction company and subcontractors have an interest in the well-being of the project. If you finance the project, the lender may mandate coverage and insist on their own name being in the policy. Sometimes, engineers and architects also appear on the policy. It’s essential to include every person who has an investment in your property.