Overview of Builders Risk Insurance
Builders risk insurance is designed to provide coverage for property damage when a building is under construction, including commercial and residential projects. Policies can cover just the structure, or also the materials on site waiting to be installed or transported to the job site.
How long is a policy is needed?
It depends upon the project. Even though you might be sure the project will be done in three or six months, it is wise to begin with a one-year policy in the event of unforeseen delays during the construction process. If you finish before the end of one year, the policy can be cancelled with not penalty to you. That means there is no short rate penalty to cancel early.
Things to look for in your builders risk coverage.
Your policy limit, deductible and structures on the project that are covered. The limit must accurately reflect the total completed value of the structure, including materials and labor, but not including land value. The deductible is what you will pay in the event of a covered loss.
Some policies specifically exclude common structures such as fencing, pools, walkways, and signs. Also, check to be sure all of your subcontractors have their own insurance policy before allowing them to work.
All Risk coverage or Specified Perils coverage.
All Risk coverage. This is designed to cover your project for a wide variety of events; the most common being fire, wind, theft, lightning, hail and explosion.
Specified Perils coverage. This only provides coverage for specific causes of loss that might occur (i.e. fire, wind, theft).