When you are a participant in a construction or renovation project, you realize things can quickly go wrong. Sudden storms, vandalism, and theft: the unexpected can stop everything in its process and cause thousands of dollars in damage. That is where the builder's risk insurance enters the picture.
Understanding Builder's Risk Insurance
Builder's risk insurance, also called course of construction insurance, is a type of specialized property insurance designed specifically for buildings under construction. Whether you are constructing a new building, making a major renovation, or adding a small addition, this type of policy will protect your investment until the construction is complete and the property is ready for occupancy.
This policy is usually bought by property owners, developers, general contractors, or even by the subcontractors who have a financial interest in the project. It acts as an insurance against most of the hazards of construction-related works.
What Does Builder’s Risk Insurance Cover?
Builder's risk insurance coverage generally covers against:
- Fire and explosions
- Theft and vandalism
- Lightning and windstorms
- Vehicle damage or aircraft damage
- Accidental damage to building materials
- Water damage (in specific situations)
It is essential to realize that every policy will be different, and the amount of coverage will differ based on the provider of the insurance and the particular requirements of your project. There are even policies that include optional endorsements which protect against such things as:
- Temporary buildings and scaffolding
- Soft costs such as lost earnings, construction loan interest, and legal fees
- Removal of debris and pollution cleanup
- Delayed opening coverage for loss of business caused by covered damage
Builder's risk insurance does not generally cover wear and tear, theft by the employees, design defects, or poor workmanship. Separate insurance or a liability policy may be required for such risks.
Who Requires Builder's Risk Insurance?
Anyone who has a financial interest in a construction project must consider purchasing builder's risk insurance. These individuals include:
- Property Owners: To safeguard the investment in their future property.
- Developers: For continuity and financial security against construction delays
- Contractors and Subcontractors: To safeguard their material and labor in place.
Although it is not mandatory to carry it, numerous lenders and project fund providers will ask for evidence of builder's risk insurance coverage in order to make disbursements.
Why is it Necessary?
Construction is a costly, complicated, and uncertain process. One incident or act of nature can sidetrack your timeline and blow out your expenses. With the protection of builder's risk insurance, you are reassured that if your project does go wrong, your losses might be mitigated.
Let us assume your framing and materials get damaged by a windstorm. If you are not insured, you would be paying out-of-pocket for replacements. With the proper policy, the insurance can pay for the replacements and you can get back to schedule.
How to Opt for the Proper Builder's Risk Insurance Coverage
Selecting the appropriate policy begins with identifying your project's scope and your budget. We at Dunbar Bedding Field are experts at assisting property owners, developers, and contractors in procuring customized builders' risk insurance coverage which is geared towards their specific requirements.
We will lead you through:
- What your policy should include
- Exemptions to be mindful of
- How to maximize your coverage within your project timeline and your budget
Whether constructing a commercial facility, remodeling a retail facility, or overseeing a large development, the inclusion of builder's risk insurance is a critical component of your risk management strategy. It is not simply a matter of compliance or lender mandates, it is about safeguarding your investment throughout the entire process.
Contact Us to Safeguard your Construction Project
Contact us at Dunbar Bedding Field for a customized consultation. Our experts in insurance will assist you in securing the appropriate builder's risk insurance coverage to ensure your project goes ahead, securely and confidently.