Any time you take on a large construction or renovation project, a number of unexpected problems can occur. This is especially true in Mississippi, where severe weather events are common. Fortunately, a good builders risk insurance policy can keep these problems from hurting your finances
If you are planning a construction or renovation project, be sure to consult a local independent insurance agent before you get started. These agents can explain how builders risk insurance works and can find you a suitable policy at a reasonable price. Talk to an insurance agent near you to learn more.
What Is Builders Risk Insurance?
Builders risk insurance is a type of property insurance that is specifically designed to cover building materials, construction equipment, and buildings that are currently under construction or renovation.
Also referred to as “course of construction insurance,” builders risk insurance is temporary. In most cases, your policy’s coverage will begin as soon as work on your project starts and will end as soon as the project is completed.
How Much Does Builders Insurance Cost in Mississippi?
Builders risk insurance rates will vary from one project to the next. Costs are based on several factors such as the following.
- The size of your project and its expected construction costs
- The location of your project’s worksite
- The time of year you will be working on your project
- How long you expect your project to take
- Which, if any, coverage options and endorsements you want to include in your policy
In general, builders risk insurance costs tend to run between 1% and 4% of your total estimated construction costs. The only way to get an accurate idea of how much your project will cost to cover is by requesting a customized quotes from a few competing insurance providers.
What Does Mississippi Builders Risk Insurance Cover?
You can expect a typical builders risk insurance policy to cover damage to the following.
- Building materials and supplies
- Construction equipment
- Tools and machinery
- The structure of the property being built or renovated
Additionally, insurance companies will usually offer optional extensions, or “endorsements," that you can buy so that your policy also covers things like the following.
- Soft costs (These will be discussed later in the article.)
- Temporary structures erected at the job site
- Important documents like construction plans and blueprints
- Property in transit or in temporary storage facilities
- Backup of sewers and drains
- Fire department service fees
- Clean-up and disposal expenses
Some insurance companies may offer more coverage than others. For instance, while one provider’s builders risk policy might include coverage for your subcontractors’ tools and equipment, another’s might not. That is why when comparing policies, you need to look at more than just the quoted price.
What Hazards Are Covered by Mississippi Builders Risk Insurance?
Most builders risk insurance policies will cover your project against all possible hazards except for floods and earthquakes, which are specifically excluded.
You can expect your policy to cover loss and damage caused by the following.
- Fires and explosions
- Severe weather events, including hurricanes, tornadoes, hail, electrical storms, tropical storms, and windstorms
- Property crimes, including theft, arson, and vandalism
Be sure to review the coverage offered by any policy you are considering to be certain that it will protect you against the risks you are likely to face at your location in Mississippi.
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What Are Soft Costs?
Builders risk insurance policies can cover what are known as “soft costs.” Soft costs are extra expenses or losses incurred because of a delay to the project’s completion date. These delays usually occur if you experience a problem like a fire or a hurricane.
As long as your builders risk insurance policy includes soft cost coverage, you can be compensated for the following things.
- Loss of sales or rental income
- Payments for insurance renewals
- Extra legal fees, architectural fees, and/or accounting fees
- Related marketing expenses
- Real estate taxes
- Additional interest on loans
Because soft costs can really add up if your project completion date is delayed, you may want to be sure that your policy includes this coverage.
What Is Not Covered by Builders Risk Insurance in Mississippi?
There are a few risks that are not covered by builders risk insurance. To be covered against these hazards, you will need to purchase different types of coverage.
Specifically, builders risk insurance does not cover the following.
- Losses or lawsuits related to poor design or workmanship
- Mechanical malfunctions of your construction equipment
- Damage caused by floods and earthquakes
- Employee theft
- Damage to your construction vehicles
- Acts of war or terror
Each of the risks mentioned above can be covered by other commercial insurance products. This is why consulting an insurance professional can be beneficial.
Who Is Responsible for Purchasing Builders Risk Insurance in Mississippi?
Purchasing a builders risk insurance policy is usually the responsibility of the general contractor or the owner/developer on the project. Any individuals or companies who have a financial interest in the project should also be named in the policy.
You will want to be sure your builders risk insurance policy includes coverage for the following people.
- 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, you should not expect your home insurance to provide compensation if there are expensive problems during the renovation.
Instead, you will either want to either purchase a homeowners builders risk insurance policy if you are doing the job yourself, or make sure that you have been named on a policy purchased by a general contractor. That way, you will have the coverage you need if something goes wrong.
How to Find the Best Builders Risk Insurance in Mississippi
Local independent insurance agents are available to answer your insurance-related questions and to help you find appropriate coverage for your construction or renovation project.
These experienced agents are free to work with several different insurance providers, so they can save you time and money by shopping around to find you the coverage you need at a competitive price.
There are more than 200 independent agents throughout the state of Mississippi. Set up an obligation-free 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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