Builders Risk Insurance

There are many unique risks to building or renovating a property, such as property damage, theft, or vandalism, and you need to be prepared.

Builder’s risk coverage, sometimes referred to as course of construction insurance, is a type of property insurance specifically designed to cover property during construction, including renovation and repair. The builder or general contractor often purchases this insurance coverage; however, it can also be purchased by the property owner. If this policy is not included in the contract with the contractor, we strongly recommend purchasing it independently.

Regardless of who purchases the coverage, any person or company with a financial interest in the construction project needs builder’s risk insurance. Typically, the people named on the policy will include:

  • Property owner
  • General contractor
  • Subcontractors
  • Lender
  • Architects

If you do not have builder’s risk insurance and something happens during the building or renovation process, you will be fully liable for the replacement cost. A basic builder’s risk insurance policy helps cover buildings and structures under construction. It also helps protect:

  • Materials
  • Supplies
  • Equipment on-site, in transit, or at other locations
  • Lost sales
  • Rental income
  • Additional interest on loans
  • Real estate taxes

However, you need to be aware that builder’s risk insurance may have coverage exclusions. So, make sure you talk to your broker about the exact coverage you have and don’t have.

For example, suppose you are building a home with a general contractor. During construction, a storm comes and causes significant damage to the structure; your builder’s risk insurance will cover the cost of the repairs.

When considering builder’s risk insurance, the most important thing to remember is you need to purchase it before construction starts. If you wait until after the construction begins, you will likely be denied coverage.

The cost of builder’s risk is relatively inexpensive; they typically range from 1-4 percent of the total construction costs. Call Mike today at 709-726-4498 for more information or to get a quote today.

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