Builders Risk

Builders risk insurance is designed to protect individuals, businesses and organizations that invest in property construction. Property includes a building or structure and does not refer to apartments or single family homes. The coverage includes the costs of losses and damages that are caused to structures, labor, equipment and materials.

Covered damages include fires, thefts, wind and vandalism. Damages from hail, lightning, explosions and vehicle accidents are also covered. Although wind and hail are covered, other forms of inclement weather like hurricanes, floods and earthquakes are not. Thefts made by employees and workplace accidents are not. Problems that are caused by the workers’ negligence are excluded. The inclusions and exclusions vary with each policy and insurance company.

Types of Coverage

In addition to buildings and materials, there are coverage options for delays and loss of sales, income and interest. Any expense that is added during the delay is covered.

For additional coverage, policyholders can buy extensions. These additions include temporary structures and scaffolding along with cleanup services. Also included are the costs of installing an environmentally friendly building.

How the Policy Works

This type of insurance covers damages up to certain monetary limits. Policyholders choose the limits based on the estimated total values of the project, which excludes land value. They should determine the total budget first before choosing a policy.

The most common lengths of coverage are three, six and 12 months. A project that requires more time can be extended but with limitations. The policy will cease working once the project is finished and the property is open for public use.

Other Important Facts and Benefits

Builders risk insurance is recommended to people who are particularly concerned about their construction projects. They are not 100% certain that their building will go as planned. Some people work with construction companies that may or may not be entirely unreliable. Others are financially strapped and have invested all of their money in the construction work. So they cannot afford to pay for expensive mistakes in case something goes wrong. Overall, any property owner who wants total peace of mind and protection should invest in this type of insurance.