Building and construction projects are complicated with
no shortage of things that can go wrong. With everything
that can happen during the construction process, it is
essential to have the proper insurance in place. Of all of
the different insurance coverages to consider, builders
risk insurance is one of the most essential for companies
in the construction industry.
While builders risk insurance, also sometimes referred to
as course of construction insurance, is important, it is
also very complex and easily misunderstood. This
Coverage Insights examines what you need to know
about builders risk insurance and how it can protect your
What Is Builders Risk Insurance?
Builders risk insurance is a specialized type of property
insurance that is intended to provide protection for
buildings and structures that are under construction.
These policies protect project owners, general
contractors and subcontractors against direct physical
loss or damage to covered property.
In many instances, builders risk policies also provide
coverage for materials and supplies that are on-site, in
transit and being stored temporarily at off-site locations
if they are intended to become a permanent part of a
building or structure. What’s more, builders risk policies
can be written to include coverage for loss of income and
additional expenses. This coverage would apply if the
completion of a project is delayed due to property
damage caused by a covered cause of loss.
Builders risk coverage is a temporary form of insurance.
Coverage applies only during the course of construction,
erection and fabrication. In most cases, builders risk
coverage stays in force until a construction project is
accepted by the project owner or once construction is
considered complete. Once construction is completed, it
is up to the owner of the building or structure to secure
traditional property insurance.
Another thing to keep in mind is that there is no standard
form of builders risk insurance. Policies can vary between
insurance companies, and, in many instances, the
coverage terms of a builders risk policy can be
negotiated. In most cases, builders risk policies are
written on an “all risk” basis. This means that coverage
applies for all causes of loss except those specifically
excluded by the policy.
What Am I Protected From?
Builders risk insurance can cover a wide range of causes
of property damage. The exact parameters of your policy
may vary, but in general, builders risk insurance includes
coverage for the following causes of property damage:
- Impact by vehicle or aircraft
It is important to comb over your policy carefully in order
to make sure you are aware of what is and isn’t covered
under your builders risk insurance. Builders risk policies
often do not provide coverage for property damage
caused by flaws in design, planning or workmanship.
Other specific exclusions may be included in your policy.
While exclusions vary from policy to policy, the following
cases of loss are typically not covered under builders risk
- Property damage caused by employee dishonesty or theft
- Property damage caused by earthquakes
- Acts of war
- Government actions
- Mechanical breakdowns
Talk to Your Broker
Builders risk insurance is necessary coverage for many
businesses. Remember, we’re here to help you with all of
your construction industry insurance needs. Protect your
project, your wallet and your company by contacting
Insurance Solutions at 866-335-8602 to discuss builders risk insurance
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