New building construction can be a long, complicated process, especially when unexpected events happen. These unexpected events, often out of your control, can put a serious dent in your construction finances if you’re not properly prepared or insured. That’s where builder’s risk insurance comes in.
Understanding what builder’s risk insurance covers is the first step to ensuring your construction project is properly protected. We’ll take a comprehensive look at what builder’s risk insurance is and how you can utilize its coverage.
What is Builder’s Risk Insurance?
Builder’s risk insurance is a type of property insurance that helps protect your investment in case of covered perils such as injury, damage, vandalism, and more. Natural disasters like fire, floods, hurricanes, or earthquakes are typically not covered in a builder’s risk insurance policy unless specified.
If your property sustains physical loss or damage from a covered peril, your builder’s risk policy will come into play, ensuring you have the financial relief to get the project back on track. Builder’s risk insurance is often required by lenders as a condition of financing the construction project.
Who Needs Builder’s Risk Insurance?
If you’re planning any type of renovation or construction on your personal or commercial property, you’ll need to purchase builder’s risk insurance. This includes new building construction, additions, and renovations. If you’re leasing space to a tenant who is renovating, you may not need this type of coverage because the tenant’s policy might cover the work being done.
What Does Builder’s Risk Insurance Cover?
Builder’s risk policies typically cover four main areas: materials, fixtures, equipment, and the structure itself.
- Materials: These are items that have been delivered to the job site but have not yet been installed. For example, if a shipment of windows is delivered and then stolen from the job site, builder’s risk insurance would cover the cost of replacing them.
- Fixtures: Once materials are installed, they become fixtures. For example, if the windows that were stolen were already installed, they would be considered fixtures.
- Equipment: This includes items that are brought to the job site for use in construction or renovation, but have not yet been installed. For example, a crane used to lift heavy equipment onto the roof would be considered equipment.
- The Structure: This is the actual building under construction or renovation.
In addition to these four main areas, what else does builder’s risk insurance cover? These policies also provide relief for valuable papers, architect/engineer fees, and debris removal.
- Valuable Papers: This includes things like construction drawings, permits, and other documents related to the project.
- Architect/Engineer Fees: If you need to hire an architect or engineer to redesign the project due to damage from a covered peril, builder’s risk insurance would cover those costs.
- Debris Removal: In the event that your property is damaged by a covered peril and needs debris removal, builder’s risk insurance would cover the cost of removing the scraps and garbage.
Invest in Builder’s Risk Insurance with Bethany Insurance
At Bethany Insurance, we understand that every construction project is different and has unique risks. We can help you tailor a builder’s risk policy that meets your specific needs and gives you peace of mind knowing that your investment is protected. Contact us today to get started.
