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11 (More) Must-Know Facts About Builders Risk Insurance, Part 2

Builders risk insurance is a wise investment for contractors jumping into new projects. Also called course of construction insurance, this broad policy covers your new project from a broad range of accidents. This can include everything from fire and flood to theft and vandalism.

We’ve already set you up for success with 11 Must-Know Facts About Builders Risk Insurance, but we want to let you in on even more awesome info about this can’t-miss policy.

Discover what your policy should cover, what factors impact your premiums, and more.

Ready to learn (even more) about builders risk?

11 (More) Must-Know Facts About Builders Risk Insurance

  1. If you’re a general contractor or a property owner/developer, then you’re typically the one responsible for purchasing builders risk insurance for the construction projects you’re responsible for. If you are a subcontractor, you are generally included as a “named insured” on the builders risk policy which the general contractor took out.
  2. Builders risk insurance does not cover buildings you’re doing small repairs on. It’s intended to insure residential or commercial buildings that are being constructed or having major remodels done.
  3. Coverage for earthquakes and floods is commonly excluded from most builders risk policies, but that doesn't mean you can't add it. Earthquake and flood coverage is generally available as an endorsement or separate policy if your project needs this protection.
  4. What do you do if a wind storm hits your construction project and the entire frame caves in? Luckily, most builders risk policies generally cover collapse. (Read your policy carefully though- there may be exceptions if the collapse is due to design errors or faulty workmanship if your policy contains a faulty workmanship exclusion.)
  5. You can add coverage for soft costs to your policy. By opting for this additional coverage, you can protect your project not only from the direct financial loss of supplies and property but from less tangible losses as well. Soft costs typically include losses incurred from project delay, such as extended equipment rentals.
  6. According to the IRMI (International Risk Management Institute), most policy limits are determined by the estimated completed value of your project. Be sure your estimate includes overhead and profit, as well as the value of all covered property such as materials and supplies.
  7. If any of the parties listed on the policy has filed bankruptcy in the last 10 years, the price of your course of construction coverage could go up. And that's not all: your claims history can play a big role in your policy pricing, too.
  8. The materials you’re using in your project may impact policy costs- for example, using a wooden frame instead of the more conventional steel could increase your premiums.
  9. The location of your project may impact the price of your coverage. Your course of construction policy may be cheaper if you’re not building in Tornado Alley or along a fault line, for example.
  10. Most builders risk policies are “all-risk” policies. This means that, unless an accident is specifically excluded from the policy, most are covered. With the exception of specific exclusions, these policies offer protection against a broad range of risks.
  11. Builders risk insurance may not protect you from certain incidents that don’t qualify as accidents, such as faulty workmanship while you’re working on a project. Read your policy carefully and understand the exclusions it contains. You may need additional insurance protection to cover you against faulty workmanship risks.

Builders risk insurance protects you in case the worst happens while you’re working on a project. Accidents can get expensive fast. As efficient as you and your team are, a fire or flood on a construction site could hurt your company financially and set your project back weeks or even months. That’s why it’s important to make sure that your project has a course of construction policy written by a specialized insurance company that understands the risks your contracting company faces.

Like what you saw? Don't forget to check out our first post in the series: 11 Must Know Facts About Builders Risk Insurance. And leave us a comment if we've left anything out!

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