Building a new structure is an exciting venture, whether you're constructing a residential home, a commercial building, or any other type of property. However, with the excitement comes a range of risks that can impact the success of your project. One way to mitigate these risks is by securing Builders Risk coverage, a specialized type of insurance that provides protection during the construction phase. This article aims to explain what Builders Risk coverage is, the different coverages it can include, when you should purchase it, and how it can be acquired by either the owner or the contractor.
What is Builders Risk Coverage?
Builders Risk coverage, also known as course of construction insurance, is a type of property insurance that covers buildings under construction. This insurance policy is designed to protect the interests of various parties involved in the construction process, including the property owner, general contractor, subcontractors, and other stakeholders. Builders Risk coverage typically provides protection against physical loss or damage to the property due to various perils such as fire, theft, vandalism, and certain weather-related events.
Types of Coverage Available for Builders Risk Insurance
Builders Risk coverage can be tailored to fit the specific needs of your construction project. Some common coverages that can be quoted are:
Property Damage: Covers damage to the building under construction, as well as materials on-site. Depending on the policy, the covered perils may include theft, vandalism, fire and wind.
Transit: Protects materials and equipment while in transit to the construction site.
Soft Costs: Covers additional expenses that may arise due to project delays, such as increased interest on loans, architectural and engineering fees, and legal expenses.
Equipment Breakdown: Covers the cost of repairing or replacing essential construction equipment that suffers a mechanical or electrical breakdown.
Flood and Earthquake: Provides coverage for damage caused by natural disasters such as floods and earthquakes, which are typically excluded from standard property damage policies.
Materials Stored Off Site: Protects materials and supplies stored at a different location from the construction site, ensuring they are covered against theft, vandalism, and other perils while awaiting transportation.
When to Purchase Builders Risk Insurance
It's essential to purchase Builders Risk coverage before the construction project begins. Ideally, the policy should be in place as soon as you start planning for the project and before any materials or equipment are delivered to the site. This ensures that you have protection from the outset, safeguarding against any unforeseen events that could cause delays or financial losses.
Who Should Purchase Builders Risk Insurance?
Builders Risk insurance can be purchased by either the property owner or the contractor, depending on the terms of the construction contract. In some cases, the property owner may require the contractor to purchase the policy, while in other instances, the owner may choose to secure the coverage themselves.
If the contractor purchases the Builders Risk policy, the property owner can be added as an additional insured. This means that both the contractor and the owner are protected under the same policy, ensuring that their respective interests are covered in the event of a loss.
Our Experience With Builders Risk Coverage
Builders Risk coverage is an essential component of any construction project, providing vital protection against a range of potential risks. By understanding what Builders Risk insurance is, the different coverages it can include, when to purchase it, and who should secure the policy, you can ensure that your project is well-guarded against unforeseen events.
At The Hartwell Corporation, we have been writing Builders Risk policies for many years and have extensive experience in tailoring coverage to fit the unique needs of each construction project. We understand the complexities and risks associated with building and strive to provide customized insurance solutions.
Contact us today to learn more about our Builders Risk insurance solutions and how we can assist you in tailoring a policy that fits your specific needs. Let us help you build with confidence.
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