As a responsible homeowner, you want to take all the precautions you can to protect yourself and your property. When you’re having a renovation or any work done on your property, you may wonder how you can protect your assets.
The first step would be to contact your insurance agent and ask them if your current homeowners policy will insure your project. Depending on the size and type of project, you may already have the coverage you need.
Typically, remodeling, renovations, and new construction will require a specialized type of insurance.
Builders risk insurance is a type of coverage that protects you and your contractors. When speaking with your insurance agent, they may also refer to this type of property coverage as Course of Construction insurance.
While no one wants to imagine their project going wrong, it is wise to make decisions that will protect you if an unfortunate event does occur. Even the most minor accidents can break the bank or get you sued without the proper protection.
A homeowner is not the only one who may invest in a builders risk policy. A contractor or anyone else involved in the project may purchase this coverage. All who are included in the project should discuss who will buy a policy before any construction begins.
Who should get a builders risk policy?
Unlike automobile insurance or other types of insurance, builders risk insurance is not mandatory. This doesn’t mean you should skip out on it, though. Because of its importance in risk management, you may not even be able to hire a company without it.
Any person or company with a financial interest in your project will want to invest in builders risk insurance. This could include you (the property owner), the general contractor, subcontractors, architects, retail companies, and the financial lender.
Usually, it will be the homeowner who purchases the coverage to renovate their home or construction project. Even if the contractor or developer states that they will handle the policy, insurance costs will be factored into their project bid.
Regardless of who purchases the builders risk insurance policy, the policy must include all who are involved in the construction project. Including all who are invested in the project will ensure they are all covered for any accidents during construction.
Coverage and loss protection
Builders risk insurance is quite similar to your standard homeowners insurance policy. It protects the building or structure that is being worked on from many of the same risks.
Risk insurance can cover the cost of damages done to the construction project resulting from:
- Vehicle or aircraft collision
- Fire damage
- Severe weather events, including extensive winds, flooding, and earthquake coverage
Aside from the previously mentioned types of property damage, some costs that are not directly related to the construction may be covered too. For instance, if property damage caused a delay in the project, you may be able to receive coverage for:
- Lost sales
- Rental income
- Interest that was added to loans
- Real estate taxes
A standard policy covers buildings and structures under construction and the materials, supplies, and equipment located on the construction site. For additional protection, there are common extensions for certain situations you may include in your policy.
Some of these extensions include protection for:
- Valuable papers (construction forms, site plans, blueprints)
- Temporary structures
- Property that will be used and installed in the secured location
- Property in transit
- Water damage caused by the backup of sewers and drains
- Trees, shrubs, sod, and plants
- Pollutant cleanup
- Removal and disposal of debris
Types of property covered
Now that you understand what type of events your builders risk insurance policy may protect you from, you may want to know what types of property are covered.
As mentioned, builders risk insurance will insure any buildings and structures being built, remodeled, or renovated. But, the policy will also cover the following types of property at the construction site:
- Building materials
- Construction sites
- Electrical work and wiring
- Underground piping
As always, you will want to schedule an appointment with your professional insurance agent to determine what your policy will cover.
Builders risk insurance exclusions
While a builders risk insurance policy is beneficial for all involved in the construction project, it is essential to understand that there are exclusions. Your policy is based specifically on your construction site and the property related to the project.
Some standard exclusions include:
- Employee injuries
- Mechanical breakdowns
- Rust and corrosion
- Wear and tear
- Faulty planning
- Earth movement
- War and military action
- Nuclear hazard
If you are concerned about any of these exclusions, other types of insurance may apply to those specific situations.
Building the best policy for the job
At Frost & Remer, we understand that accidents happen and know how important it is to prepare for the unexpected.
Renovating or remodeling your home should be an exciting time, not a time of worry. With the right protection, you can put those negative thoughts aside and focus on your project.
In the case that an accident did occur, we would be right there by your side, providing you with coverage and peace of mind.
Contact us with your questions and to learn more about our policies, bundles, and discounts.