If you are in the construction business, you have probably heard of a builder’s risk policy, but maybe are not familiar with all the ins and outs of what it covers, so that’s what we will discuss today.
A builder’s risk policy is a type of inland marine coverage that is specifically meant to cover buildings and structures during the course of construction or renovation.
Builder’s risk policies can be written to cover new construction, additions to existing buildings, or renovations/repairs/remodels. These policies can be written either under the name of the owner of the structure or under the name of the contractor performing the services. To determine which party is responsible for the coverage, most contractors write it into the construction contract to avoid any confusion or potential litigation.
These policies will cover physical damage (including theft and vandalism) to both the structure being built and the materials purchased or obtained to become part of the completed building as long as they are on the premises where the structure is being built or renovated. Also covered for physical damage are materials and supplies that are not at the jobsite, but at a temporary storage location; temporary structures (such as scaffolding, fences, portable toilets, etc.); property in transit; and debris removal.
If you are performing a renovation, the policyholder can choose whether to cover the existing structure, which can be very helpful in the event of a claim. We usually recommend that the policy be written to cover the existing structure to avoid any confusion on what is considered the existing structure and what is the new or renovated structure in the event of a claim as the premium difference is minimal.
These policies can be written individually per location or structure, or the contractor performing the build/renovation can have a “reporting form” policy to cover all their projects at the same time to save them money in the long run. As a contractor, if you have multiple projects on tap at one time, this is going to be the best option for you to get the most cost-effective coverage.
If you have any questions or if you would like to know more about builder’s risk insurance, please feel free to reach out to our team!