Justin and Sam are both remodeling contractors. The two men have very similar business models: their companies are the same size, and they take on similar projects. What’s different for the two contractors, however, is the price they pay for contractor insurance.
Justin started his remodeling business in Texas, where he relocated to benefit from a favorable job and housing market. But Justin is also doing business smack dab in the middle of Tornado Alley, and he has seen firsthand the devastation and disaster a tornado can bring three out of the last four years.
Sam, on the other hand, is doing business in sunny Southern California. He works all year-round, and loves the weather -- until late summer and early fall, when wildfire season starts.
Course of Construction Protects your Project from Disaster
Tornados. Fires. Floods. Earthquakes. Hurricanes. All across the United States, there is an extreme weather or natural disaster event that happens regularly in your hometown.
If one of these events, extreme weather or natural disaster, strikes a project while you are working on it, it could stall your progress, ruin your materials, and cost you out of pocket to recover, repair, and replace the damage.
That’s where a course of construction policy, which is also known as builders risk, protects your construction business.
When you need to clear debris, replace materials, repair damage, and get back on schedule, your course of construction policy keeps you from paying the full price for these geographical (and unfortunate) events.
Severe winter storms, hurricane season, Tornado Alley, earthquake zones. These events do more than just define your location; they also define the costs of your builders risk insurance policy.
Course of Construction: Different Rates in Different States
Your rates for a builders risk policy will vary from state to state, and even by county or city, since different regions or territories may be more at risk for a particular event than another.
For example, Sam has to contend with wildfires, but his particular county isn’t at risk for earthquake activity compared to other places in California.
There are numerous factors that come into play in determining your contractor insurance premiums, and the geographical location is one of them.
You may not be able to control the fires, floods, tornados, hurricanes, or earthquakes where you live, or the costs of doing business in that region. But many of your insurance premium costs are within your control, such as maintaining the right coverage, being on time with payments, and not making unnecessary claims.
Insurance costs are a part of doing business, but when you live in an area where a disaster is more likely to happen, the cost of not having coverage is even greater.