Builder’s risk insurance, also known as course of construction insurance, is a specialized type of property insurance that helps protect buildings under construction. Builders’ risk insurance is essential in helping protect construction projects but can be complex and often misunderstood. However, having a properly structured builder’s risk insurance policy can be crucial. In fact, it will serve as the backbone of a successful risk management program.
Builder’s risk insurance helps protect construction projects from property damage due to:
- Fire
- Lightning
- Hail
- Explosions
- Theft
- Vandalism
- Acts of God, like hurricanes
Who Needs Builder’s Risk Coverage?
Any person or company with a financial interest in the construction project needs builder’s risk insurance. Some common people you may want to include on your policy as insureds include the:
- Property owner
- General contractor
- Subcontractors
- Lender
- Architects
What Types of Property Does Builder’s Risk Insurance Cover?
A basic builder’s risk insurance policy helps cover buildings and structures under construction. It also helps protect:
- Materials
- Supplies
- Equipment on-site, in transit, or at other locations.
What Does Builder’s Risk Insurance Cover?
A builder’s risk insurance policy helps protect your construction projects from certain kinds of property damage. It can also help cover additional soft costs, or expenses not directly related to construction if property damage causes a delay. This can include:
- Lost sales
- Rental income
- Additional interest on loans
- Real estate taxes
Because every construction project is unique, each builder’s risk policy is different. You can customize your policy to fit your project’s needs by getting coverage extensions. Common extensions include protection for:
- Scaffolding
- Construction forms
- Temporary structures
- Debris removal and disposal in the event of a loss
- Pollutant cleanup
Builder’s Risk Insurance Exclusions
Be aware that builder’s risk insurance may have coverage exclusions. For example, earthquake, flood, wind or beach zones are usually excluded from coverage, but you may be able to get extensions to help protect projects vulnerable to these kinds of risks.
Other builder’s risk insurance coverage exclusions include:
- Wear and tear
- Acts of terrorism and war
- Employee theft
- Rust and corrosion
- Mechanical breakdowns
- Damage due to faulty design
- Planning
- Workmanship and materials
- Engineers
How Much Does Builder’s Risk Insurance Cost?
Every builder’s risk insurance policy is different, so costs vary depending on what you need. Your policy may need more coverage or you may need to add extensions to help protect your construction project. Generally, your builder’s risk insurance cost depends on the:
- Property Location
- Construction materials
- Type of project – Residential or Commercial
- Policy details, like coverage amounts and limits
A good rule of thumb is to choose coverage limits that are equal to the anticipated cost of construction. If you would like to learn more about Builders Risk Insurance and or if you would like to get a free consultation and quote, we would be happy to assist. Our expertise is in Construction Insurance! Call Kevin at: 530.320.3617 or via email at: [email protected]
We also offer consultations and specialize in affordable construction insurance such as Contractors General Liability Insurance, Contractors License Bonds, and Workers Compensation Insurance.