Builders risk insurance protects a construction project from a wide variety of accidents, including fire and vandalism. Because this policy covers such a large range of incidents and parties, it’s an invaluable part of your construction insurance. However, it’s important to be aware of what builders risk insurance doesn’t cover, so that you know where you may need to fill in the gaps in your coverage with other policies.
5 Incidents Your Builders Risk Insurance Won’t Cover<
Even though your builders risk policy may be written as “all-risk,” don’t fall into the trap of thinking your coverage is bullet-proof. Every insurance policy will have some coverage exceptions in place.
Here are five scenarios where you may not be protected by your builders risk policy:
#1: Overlapping Liability Coverage
While your builders risk policy might overlap with your liability insurance in certain areas, your builders risk insurance typically won’t cover liability issues that could be covered by other policies. For example, your policy may not cover an accident if the insurance company determines that the incident was caused by negligence by you or another insured party. In that case, you may need general liability insurance instead.
#2: Faulty Workmanship
This includes faulty design and materials as well as faulty workmanship. Builders risk insurance only covers certain accidents, and faulty workmanship typically isn’t covered under this policy. This type of damage is often the result of a professional error, not an accident. Read your builders risk insurance policy carefully, and don’t be surprised if it includes a specific exclusion for faulty workmanship.
Luckily, you don’t need to be completely exposed to faulty workmanship risks. Citizens General offers a Faulty Workmanship endorsement for contractor general liability policies which extends up to $10,000 worth of coverage if you make a mistake. Contact us to learn more.
#3: Intentional Damage
While builders risk insurance may cover acts of vandalism, this only applies to damage done by third-parties. If you or any of the other insured parties covered under your policy intentionally damage the property or your materials and equipment, the insurance company will not cover the loss. Make sure you, your employees, and your subcontractors conduct themselves professionally to avoid having to pay for intentional damages.
#4: Wear and Tear
Builders risk insurance is intended to protect you from damages that occur on a construction project during the course of construction. Natural wear and tear on project supplies or equipment is typically the result of long-term weathering and use rather than a specific occurrence, and this is outside the coverage of a builders risk policy. It’s important to invest in regular maintenance of your tools and invest in quality supplies.
#5: Extreme Events
Your builders risk coverage may exclude certain extreme natural incidents such as floods or earthquakes- be sure to read through the policy before purchasing if you think your project is at risk of either of these events. If you are working on a project in a flood zone or along a fault line, your insurance carrier may offer supplemental coverage in the form of flood or earthquake insurance.
Additionally, there are certain extreme events that may be caused by a third-party that your builders risk insurance may not be able to cover. This can include nuclear risks, acts of terrorism, and acts of war.
Builders risk insurance is important coverage for any construction project. However, make sure it’s not the only insurance policy you’re relying on. While builders risk provides invaluable protection against accidents, it can’t always cover extreme accidents or events where one of the insured parties is at fault. Make sure you have a comprehensive insurance bundle to keep your company safe.