A lot of things can happen to your construction project. Fire, weather damage, theft, accidents. If you’re building a new structure or renovating or repairing an existing one, builders risk insurance provides coverage for you the property owner and your builders while the project is under construction. If you’re getting a loan for your project, your lender is probably going to require builders risk insurance under the terms of the loan.
Builders risk insurance is a form of property insurance that provides all-risk coverage against intentional damages like theft and vandalism and accidental losses, damages and destruction. While it can cover the contractor at the property owner’s request, it does not cover the contractor’s tools or equipment. Nor does it apply to any losses before the stated dated construction began and the stated date it ended. Builders risk insurance coverage is only in effect while construction on your project is in progress.
Your builders risk insurance policy will not cover certain soft costs that aren’t directly related to the actual construction. These can include legal expenses, marketing and leasing expenses, loss of income due to delays in construction, or damages from flood or earthquake. All of these soft costs can be included in your builders risk insurance as optional coverage.
When looking for a builders risk insurance quote, you’re going to need a detailed accounting of several items. These will include (but aren’t necessarily limited to): the total estimated cost of your project, which is the primary factor that will determine the cost of your builders risk insurance premium; a detailed description of your project; the precise location; information about your contractor; any safety and security features in place during construction such as sprinklers, security guards, fences, etc.; a copy of your contract; and a timeline of your project including start, completion and incremental phases, which tell your builders risk insurance provider at what points of your project and for how long they’re assuming the greatest risk.
When comparing competitive builders risk insurance quotes determine if these items are included.
• Building materials, equipment and supplies installed and uninstalled; you want these things covered not just on the job site but also while in storage and in transit.
• Any equipment owned or leased by the contractor such as scaffolding or fencing.
• Coverage for weather- and natural disaster-related damage caused by storms, floods, lightning, earthquakes and sinkholes, as well as sewage and water damage.
• Any costs relative to faulty workmanship, design error, etc.