Builders Risk Insurance Provides Protection During Construction
Builders risk insurance was designed to protect buildings during the construction phase of the building process. A lot can go wrong during construction, and the consequences of this type of loss can be very detrimental to the success of the overall project. Builder's risk insurance allows the owner of the building an opportunity to protect the project from damage, theft, accident, and any number of other incidental losses that occur during construction.
The typical builders risk insurance definition is that it is a specialty property insurance product. It is considered a specialty insurance because it is only intended to protect a building during a specific period of time, or the construction phase. While a building is under construction, this insurance indemnifies against damage that occurs to both the physical property and equipment used on the property.
What Does Builder's Risk Insurance Cover?
A builders risk insurance policy will typically insure the owner from damage, theft, and loss of materials, supplies, equipment, and fixtures located on the property. There are a number or inherent risks involved with the construction of a building. These risks can include damage from the elements, fire, incidental damage, and theft.
Builders risk insurance coverage is typically handled by the owner of the property and not the general contractor responsible for the construction. The general contractor will likely have various forms of his own contractor liability insurance protection, though what is covered by such policies will vary. Building owners cannot rely on the coverage of the contractor to protect themselves from loss.
The general contractor will be responsible for liability concerns that can be "blamed" on the contractor, but most everything else falls under the property owner's responsibility.
Although most often builder risk insurance contracts are purchased by the building owner, some owners will negotiate with the general contractor to cover expenses and liability during construction. The general contractor is in essence contractually obligated to purchase builder risk insurance on behalf of the construction project. Though this is possible, it is not altogether common.
If you have a project that you believe needs builders liability insurance coverage, there may be a number of alternatives depending on your circumstances. The first alternative is what we just discussed, have the general contractor pay for the coverage. Understand that you will still end up paying for the coverage one way or another (you'll have to pay the contractor more).
The next alternative is if you already have an existing property insurance contract on the property. This would generally only be the case if you are making renovations or building new add-ons to an already once completed building. Check with your policy to see if you new building risk coverage is available on your existing plan.
Builders risk insurance is an essential part of your construction project. Don't leave yourself unprotected from unexpected circumstance. Protect yourself from damage, theft, and other loss while your new project is under construction.
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