The Importance of a Builders Risk Policy

Buildings that are under construction pose different types of risk than buildings that are fully built and operational.  Therefore, a different type of insurance is needed to cover damages to these buildings that are not completely finished or are in the process of remodeling.  Builders risk insurance can cover you for accidents that happen when your building is not quite complete.  But whatdoes builders risk insurance cover?  Here are the basics.

According to the IRMI (International Risk Management Institute) builders risk insurance is defined as follows:  “…A property insurance policy that is designed to cover property in the course of construction.”

Builders risk insurance is usually written on Inland Marine forms rather than commercial property forms.  Depending on what type of basis the policy is written – either all risks or specific risks- certain elements of the building and property will be covered. Some examples of property to be covered include:

• The buildings and structures themselves
• Materials used for construction
• Temporary structures
• Scaffolding
• Equipment that is to be kept permanently once construction is complete
• Some property being kept off premises
• In-transit property

Each policy is usually limited to the estimated completed value of the project being insured.  However, the limits can be adjusted according to the insured’s needs and will be written on either a completed value or reporting form basis.

Having a builder’s risk policy in place is important to cover building construction in progress that exceeds regular property insurance coverage limits.  It is the responsibility of the builder or the property owner to obtain this insurance.  For more information regarding builders risk coverage or any type of insurance you may be considering, please give us a call.  We would be happy to assess your needs and offer a quote for insurance that will cover your property from start to finish.

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