With an unprecedented amount of residential and commercial construction throughout the country over the past decade, builder’s risk policies have become increasingly important in adequately covering these projects. Read below to find out more about builder’s risk insurance, how it can help protect your construction project, and how you can obtain a policy.
What is builder’s risk insurance? A builder’s risk insurance policy (also known as a course of construction policy by some carriers) is intended to provide coverage for a building under construction, and can be applied to both residential and commercial projects.
Why do I need builder’s risk insurance? Most standard insurance policies, whether residential or commercial, specifically exclude coverage for properties while they are under construction. Because of this, even if your standard insurance policy is in force at the time of loss, you may be left without any coverage whatsoever if it occurs while under construction.
Builder’s risk policies are intended to cover most, if not all, parts of the construction process, including structures, building materials, construction equipment, and debris removal, among others. For residential projects, the property owner will typically be the named insured on the policy, whereas commercial projects will typically list the developer or contractor.
What does builder’s risk insurance NOT cover? Depending on the carrier through which you have your builder’s risk insurance policy, coverage can cease on a wide variety of dates, such as the date construction is completed, the date the dwelling becomes occupied, or a specified time period after a certificate of occupancy is issued by the city or municipality (e.g. 30-90 days).
In addition, many carriers will exclude coverage for the land on which the building is being constructed, theft of building materials, and other miscellaneous exclusions. If you have a question about what is/is not covered under your existing builder’s risk policy, contact the professionals at Elliot Insurance Agency today for a thorough policy review.
What discounts are available on builder’s risk insurance? While most carriers base their builder’s risk insurance premiums on the project’s dwelling limits, some may use a stated value method, which means the policyholder must report the project’s progress and estimated coverage requirements at regular intervals, while others will want to insure the property for it’s completed value from day one.
If you are looking for a residential builder’s risk policy, you may be able to receive standard discounts for bundling other personal lines policies together (e.g. auto, personal articles floaters, etc.). However, if your builder’s risk policy is intended to cover a commercial project, there may be less discounts available than with traditional forms of insurance. Whatever your needs may be, discuss your builder’s risk policy with a representative at Elliot Insurance Agency, and we’ll be happy to get you the best rate possible.
What should I avoid when purchasing builder’s risk insurance? As with most forms of insurance, you’ll want to make sure you choose appropriate limits on your builder’s risk policy, so that you’re adequately covered in the event of a loss. Also, you’ll want to make sure that your policy will be in force long enough to see the project through to completion.
How can our agency help with builder’s risk insurance? Because each construction project is different and can provide its own unique set of challenges, it’s extraordinarily important that you don’t choose a generic builder’s risk policy. Instead, contact us, and we’ll build the right builder’s risk policy to match your specific needs.