Builder's risk insurance is a type of coverage that protects a construction project's job site during the course of construction. However, that definition leaves many questions on the table - ones that we aim to answer today. Here's our short guide to understanding Builder's Risk Insurance.
1) Builder's Risk Only Covers One Project
One big thing to know about this type of property insurance is that one policy only covers one job site. That means each construction site will need it's own builder's risk coverage. Keep in mind, the cost for each policy will be different depending on the risk and size of each project.
2) It Only Covers Specific Types of Jobs
Builder's risk is a very specific type of coverage form. As such, it only protects the site from losses on major renovations and new builds. The job can be either residential or commercial; however, small jobs or jobs where people live there won't be covered.
3) More Than the General Contractor is Protected
When it comes to protection, builder's risk coverage ensures that the general contractor, property owner, and other interested parties are safe from the soft and hard costs of issues on the job site. All you have to do is make sure they are on the final contract as "named insurers" when the insurance is taken out.
4) Vandalism & Theft Aren't An Issue
If someone breaks into your site to steal and destroy everything you might be concerned. With good reason! However, with builder's risk, your temporary structures, tools, equipment, materials, and the building will all be covered properly.
5) Soft Costs Are Covered
All insurance companies and policies cover the materials that it takes for you to rebuild or fix something. However, one thing that isn't too common is the coverage for soft costs. Worry no more about things like fees and payment that must be made due to the delay and more.
6) Clean-up is Covered Too
If builder's risk seems like the best way to cover property while it's under construction, then you're not wrong. Should something happen to your site, you'll be covered for the materials lost and the time and soft costs lost too. However, that's not all. Clean-up fees and charges will be covered as well.
7) Choose Your Project Duration
When you get a builder's risk policy, you'll have the option of choosing policy lengths. These range from six months to a year on average. However, they can be extended should the project take longer than you expected.
8) Smart - But Not Required
While builder's risk is a great idea, it's not required by law. However, that doesn't mean a contract can't require it. In either case, builder's risk is a great option for those that undertake risk management. While you don't want something to go wrong, you want to stay protected if it does.
9) Each Policy if Different
While almost all "course of construction" policies will protect you from everything, it's important to know that each policy is different. If you are going to take a job in the city, then you need to think about theft and robbery more than if you take a job in the woods. However, in the woods, you might need to think about forest fires or animal issues. Your specific policy should meet your needs, not someone else's.
10) Builder's Risk Isn't Complicated
While it might seem hard to understand this special type of insurance - it's really not! Builder's risk is an insurance that protects your business income and investments for a specific job site and construction project. It ensures you and all other parties are protected and works with you should something go wrong.