Anyone who takes on a large renovation or a new building construction project in Maryland also takes on some risk. Fortunately, as long as your project is covered by a suitable builders risk insurance policy, you can rest assured that unexpected disasters won’t derail your project or wipe out your finances.
If you are planning a construction project, be sure to consult a local independent insurance agent before you start. These agents can explain how builders risk insurance works and can find you a suitable policy at a competitive price. Find an insurance agent near you to learn more.
What Is Builders Risk Insurance?
Builders risk insurance is a specialized type of property insurance that is designed to cover building materials, construction equipment, and buildings that are currently under construction or renovation.
Builders risk policies are temporary. Coverage typically begins when all work contracts have been signed, and the project begins and ends as soon as the project is completed. That is why some insurance companies refer to builders risk insurance as “course of construction insurance.”
How Much Does Builders Insurance Cost in Maryland?
The cost for a builders risk insurance policy can vary from one project to the next. Rates are based on several factors such as the following.
- The size of your project and its associated construction costs
- The time of year your project will take place
- How long you expect your project to take
- The coverage options and endorsements you are including
In most cases, builders risk insurance costs tend to fall somewhere between 1% to 4% of your total estimated construction costs.
Of course, the only way to get an accurate price is by requesting a customized quote. A local independent insurance agent can help you obtain and compare costs from a few competing providers.
What Does Maryland Builders Risk Insurance Cover?
Builders risk insurance can cover your building materials, construction equipment, and the structure of the property being worked on against many of the hazards you are likely to face while completing a construction or renovation project in Maryland.
It can also cover what are known as “soft costs.” These include a variety of additional losses that may arise if your project experiences problems or takes longer than expected to complete. These will be further explained later.
Keep in mind that different insurance companies may offer more coverage than others. For instance, while one insurance company’s builders risk policy might include coverage for your subcontractors’ tools and equipment, another’s policy might not.
That is why when comparing policies, you need to look at more than just the quoted price. A local independent insurance agent can help you review the policies that are available to you and can help you decide which one offers the coverage your project needs at the most reasonable price.
What Hazards Are Covered by Maryland Builders Risk Insurance?
Most builders risk insurance policies will protect your project against all potential hazards except those that are specifically excluded by the policy, such as floods and earthquakes.
You can expect your policy to cover loss and damage caused by the following.
- Fires and explosions
- Severe weather event including electrical storms, windstorms, hurricanes, tornadoes, hail, heavy snows, and ice accumulation.
- Property crimes including theft, arson, and vandalism.
Talk to a local independent agent for more information about the hazards that your builders risk insurance policy can cover against.
What Property Is Covered by Maryland Builders Risk Insurance?
Builders risk insurance is designed to cover against loss or damage to property including the following.
- Building materials and supplies.
- Construction equipment, tools, and machinery.
- The structure of the building that is under construction or renovation.
Insurance companies enable you to extend this coverage by purchasing special endorsements that can cover the following.
- Temporary structures erected at the job site.
- Documents such as construction forms, plans, and blueprints.
- Property that is being kept in temporary storage facilities.
- Cleanup and disposal costs.
An independent agent can help you go over the coverage needs of your construction project to ensure that your builders risk insurance policy includes all the extensions necessary for you to be fully covered.
What Soft Costs Are Covered by Maryland Builders Risk Insurance?
Soft costs are extra expenses or financial losses that are incurred due to a delay of the project’s completion date. This may happen if you encounter an unexpected problem like a fire or a hurricane. So long as your builders risk insurance policy includes soft cost coverage, you can get compensation for the following.
- Loss of sales or rental income
- Real estate taxes
- Premiums for insurance renewals
- Additional legal fees, architectural fees, and accounting fees
- Additional marketing expenses
- Additional interest on loans
An independent insurance agent can explain more about what adding soft cost coverage can do for you, and can provide you with an estimate of how much it will cost to include this endorsement to your builders risk insurance policy.
What Is Not Covered by Builders Risk Insurance in Maryland?
There are a few risks that are not covered by builders risk insurance. To be covered against these hazards, you will need to purchase supplemental coverage, if available. Specifically, builders risk insurance does not cover the following.
- Poor design or workmanship
- Mechanical malfunctions
- Floods and earthquakes
- Employee theft
- Damage to your construction vehicles
- Acts of war or terror
Local independent insurance agents can better explain your builders risk insurance policy limitations and can help you find suitable policies to mitigate these additional risks, if necessary.
Who Is Responsible for Purchasing Builders Risk Insurance in Maryland?
Builders risk insurance policies are usually the responsibility of the general contractor or the owner/developer on the project. Any person or company that has a financial interest in the project should be named in the policy.
A good builders risk insurance policy will include coverage for the following.
- The property owner
- The general contractor
- Any subcontractors hired to work on the job
If you are a homeowner who is taking on a large renovation project, be aware that your homeowners insurance is not likely to provide compensation if there are expensive problems during the renovation.
Fortunately, if you have a homeowners builders risk insurance policy or you have been named on a policy purchased by a general contractor, you will have the coverage you need if something goes wrong.
How to Find the Best Builders Risk Insurance in Maryland
Independent insurance agents can answer your insurance-related questions and can help you find suitable coverage for your construction or renovation project.
These local agents are free to work with a variety of insurance providers, so they can save you time and money by shopping around to find you suitable coverage at a competitive price.
There are more than 200 independent agents in Maryland. Set up a one-on-one consultation with an insurance agent near you to get more information and to start comparing customized builders risk insurance quotes.
TrustedChoice.com Article | Reviewed by Jeffrey Green
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