Builders Risk 101
What Is Builders Risk Insurance?
Builders Risk insurance covers the physical loss or damage to any property over the course of a construction project. Because there are many types of construction projects, there are many areas of risk that need to be considered.During the construction of a new building -- or the modification of an existing one -- damage can accidentally be caused to the structure or fixtures. Building materials and tools also require coverage, not only for breaking but also for storage and their transportation to and from working sites.
Builders Risk can also be known as Course of Construction insurance, Contract Works insurance or Contractor’s All Risk insurance.
Who Is Builders Risk Insurance For?
Builders Risk doesn’t only cover the individual contractors working on a project. Construction, development, and investment companies, as well as project owners/managers, lenders, and even materials suppliers can also benefit from a Builders Risk policy.That’s not to say contractors aren’t eligible for coverage. Anyone you might typically associate with construction sites: electricians, carpenters, roofers, framers, welders, and others can all be covered under Builders Risk insurance. One rule of thumb: as long as the work is connected to the course of construction, regardless of the trade, Builders Risk insurance will still apply.
What Types Of Project Need Builders Risk Insurance?
Whether it is a residential or commercial building, there are several types of project that need Builders Risk insurance:
- new construction
- remodel
- restructure
- installation
What Does Builders Risk Insurance Cover?
Many different things can go wrong on a building site. there are also different types of building site where each one will have its onwn unique risk areas. However, most Builders Risk insurance policies cover the folling areas:
- damage caused by fire, wind, lightning or hail
- collapse of building
- subsidence
- impact from vehicles
- loss or damage to building tools and materials on site (and their transportation/storage)
- renovation or improvement costs
- pollution clean-up and removal from site
- back-up or overflow from sewers or drains
What Is Not Covered By Builders Risk Insurance?
Because Builders Risk is primarily related to the damage caused to buildings during construction, there some risks connected to construction operations that aren’t necessarily included in standard Builders Risk policies:
- damage caused by a natural disaster (earthquake, hurricane or flooding)
- machinery and equipment breakdown due to negligence
- faulty design or workmanship
- intentional acts or deliberate vandalism
- additional works carried out on the same site (a new policy will need to be written for each project)
- bodily injury or general liability claims
More extensive Builders Risk insurance policies may include some of these as add-ons or extensions, however they are not normally included under standard packages. It is important, therefore, to browse and compare different types of product available to see which one mostly fits your requirements.
How Much Does Builders Risk Insurance Cost?
The price of a Builders Risk insurance policy will depend on the size of the construction project as well as any additional costs for replacing and repairing tools or machinery. The larger the project, the more coverage you will need to pay for.As some policies are more inclusive than others it may sometimes be cheaper to buy an extensive one rather than purchasing a basic policy with several expensive add-ons.