Understanding Builders Risk Insurance

Builder’s Risk insures a building under construction and covers the building and building materials that will become a permanent part of the completed structure. As a general description, builder’s risk policies are a specialized form of business insurance that covers property damage to covered property, including temporary structures, construction materials, and equipment at the construction site.

The contractor typically purchases the builders’ risk policy during the construction phase; however, in some instances, the property owner purchases the policy depending on the terms of the contract. Clients, including property owners, contractors, engineers, and homeowners, with a financial interest or financial stake in the construction project, can be named as insured parties.

Builder’s Risk policies can cover new construction or remodeling projects. Builder’s risk insurance applies to a wide range of construction projects, including residential and commercial construction sites, and coverage options may vary depending on the project scope and location.

Coverage usually indemnifies against losses due to fire, vandalism, lightning, wind, and other perils. Builder’s risk insurance covers property damage to construction materials, equipment, and temporary structures at the construction site, as well as materials in transit. Exclusions may include employee injuries and liability coverage, but optional coverage and additional coverage options are available for risks like floods or earthquakes. It usually does not cover earthquakes, floods, acts of war, or intentional acts of the owner. Coverage generally terminates when the work has been completed and the property is ready for use or occupancy.

The cost of builder’s risk insurance is determined by the following factors: project value, location, labor costs, type of construction materials, and the scope of coverage. Costs can vary and are influenced by these factors.

It is important to partner with an experienced agent or business insurance provider to access tailored services, expertise, and support from a dedicated team throughout the application process, claims, and policy management. The benefits of builder’s risk insurance include protecting the client’s investment, providing peace of mind, and offering flexible coverage options to meet the needs of different customers.

Builder’s risk policies are subject to control by the insurer, and customers should review policy details, exclusions, and coverage options with their agent before purchase. Timely purchase of builder’s risk insurance is essential to ensure protection for all covered property, including materials in transit to the construction site.

Why You Need Protection

Whether you are the builder, the property owner, or clients and customers involved in the construction industry, you have a vested interest in properly insuring the building and building materials left on site during the construction/remodeling phase. Buildings and building materials left on-site overnight are subject to many different risks. They may catch fire, be damaged by high winds, or fall victim to acts of vandalism or theft. Additionally, a bodily injury loss may occur on the jobsite that, in many cases, can be covered under the right Builder’s Risk policy.

Builder's risk insurance is essential for anyone with a business or financial interest in construction projects. Understanding the unique needs of clients in the construction industry is key to providing the right protection and ensuring reliable service for customers.

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