Builders Risk Insurance
Builders Risk Insurance Covers Buildings Under Construction
Developers, builders and contractors take on big risks every day. Necessary risks come with the territory when you are creating real structures from ideas and plans. But, why take on unnecessary risks? Smart developers, builders and contractors insure their buildings under construction with appropriate builders risk insurance.
Construction professionals are busy doing what they do best – building. That's why a Trusted Choice® independent agent can be a valuable part of your team. Member agents have access to coverage from many insurance companies. They can quickly and easily compare policies and rates and help you select the builders risk insurance quotes that fit your needs. Find out what makes sense for you by contacting a local Trusted Choice member agent today.
Billions of Dollars in Losses
- Commercial property losses caused by wind and thunderstorms (2011): $30 billion
- Property damage caused by fires (2010): $14.8 billion
- Estimated insured property losses caused by U.S. catastrophes 2012: $35 billion
As you can see, the economic impact of unpredictable events can be disastrous to your project’s bottom line if you do not have adequate builders risk insurance coverage.
What Is Builders Risk Insurance?
Builders risk insurance, also called "course of construction," insurance is a type of property coverage for buildings under construction, as well as all of the materials and equipment used in the project. You will typically need to purchase coverage for 100 percent of the anticipated construction costs.
The coverage can be especially important if you are working with materials that are prone to damage, or if you are working in an area that is prone to certain types of severe weather. It is also important coverage that protects your investment from unforeseen risks. Be sure to work with a knowledgeable commercial insurance agent when choosing the type and amount of builders risk coverage you need.
What Builders Risk Insurance Covers
Your builders risk insurance policy can be structured to cover the following:
- Property damage: Includes construction material, heavy machinery and equipment, temporary structures, cribbing, false work, fencing, scaffolding, construction signs and landscaping
- Theft: Some builders risk insurance policies will cover theft of building materials; to get this coverage, you may need to have a gated job site
- Labor costs and earned profits: Replaces labor costs, income and expenses
- Perils of nature and man-made disasters: Hurricanes, fires, blizzards, severe hail storms, lightning, black outs, broken water mains
- Other damages: Negligent workmanship, flawed materials or design
Some coverage will be part of a basic policy and other items will need to be added on. It is important that you work through the details of a policy beforehand. A Trusted Choice member agent can help you create a policy customized to the project you are working on. Independent agents can give you access to multiple companies and policies and direct you to the companies who are strong in the areas you are most concerned about insuring.
What Is Excluded from a Builders Risk Insurance Policy?
Note that these policies do not cover accidents and injuries at the workplace or liability risks. They will also exclude certain acts of nature, such as earthquakes and floods.
Typically you can buy flood insurance and earthquake insurance separately. Be sure to work with an agent who will help assess your risks and can review your coverage carefully.
How Long Does the Insurance Last? How Much Does it Cost?
Normally the insurance lasts three, six or twelve months, and you can usually extend the term at least once if the building is not completed. The coverage ends when the building is completed or occupied.
A builders risk policy will typically cost one to three percent of the total construction budget, depending on the coverage and insurance company. A Trusted Choice independent agent can help you sort through the different coverage options and give you an exact builders insurance quote.
Fast Claims and Manageable Coinsurance Specifications
One of the most important things you want to find out about the business insurance company you choose is how fast they process and pay claims. When you are on a strict construction timeline, getting fast claims service will be essential in order to complete your project and meet your budget.
Also, be aware of burdensome or unfair coninsurance clauses. Some coinsurance clauses can penalize you unnecessarily if the amount of coverage you are carrying does not meet the specifications written into the policy.
Coinsurance clauses can lower your premiums, but impose a penalty on you if you file a claim. The penalties are triggered when the reported value of the property is less than the actual value of the property under construction. So make sure that the details of the coinsurance specifications are clear and that you can readjust your property values as construction progresses. Also, you need to determine beforehand if the cost of the lower premiums offsets the potential penalties incurred if you file a claim.
The Advantage of Working with an Independent Agent
Whenever you take on a new construction project, the risks are substantial. That’s why is it is important to have a Trusted Choice independent agent on your team to help you minimize your “course of construction” building risks.
Your agent will provide you with access to multiple companies and builders risk insurance policy options and advise you on how to customize the options to your specific construction project. Your agent can also meet all of your commercial insurance coverage out of one office. Contact a Trusted Choice member agent today.
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