Understanding Builder’s Risk Insurance

Builder’s Risk Insurance


If you manage construction projects, builders risk insurance is essential to keep your job site protected. Even still, it is a complex and often misunderstood type of insurance. Unlike things like car insurance, there are no standard policy forms and coverage will vary from insurer to insurer.

In this post, Builder’s Risk Insurance is going to help you understand our namesake. Because, if correctly set up, this type of insurance can serve as the vital piece of your risk management program.

What Is Builders Risk?

Builders Risk is a type of specialized type of property insurance designed for buildings and sites currently under construction. Often called “course of construction” insurance, this coverage begins when purchased and ends when the site is ready for use.

The reason that no two policies are alike is that no two sites are the same. That said, there are similarities between builders’ risk policies. For example, most cover property loss caused by fire, lightning, hail, explosions, hurricanes, theft, and vandalism. Sometimes, soft costs like real estate taxes or even pay can be covered depending on the type of insurance that you take.

On the other hand, things like earthquakes, floods, and wind are excluded unless bought as an addon. Overall, builder’s risk protection helps to minimize the financial impact of issues that occur onsite.

What Types of Property Does Builders Risk Cover?

If you’re looking for a policy, then you have a site under construction with no one using it or living in it. The policy will cover the whole site, each structure, and the materials, supplies, and equipment that are onsite, in transit, and storage for use on the site.

Who Needs Builders Risk Coverage?

If you have a monetary stake in the construction project, you need to be protected with Builder’s Risk Insurance. This means you could be the property owner, general contractor, or even a subcontractor. Sometimes the architect or engineer will be named on the policy as well.

What Do You Need to Consider When Purchasing a Policy?

If you’re looking for a policy, think about these things before making the final decision.

Find a Good Experienced Agent

In order to get the best policy, you’ll need the best agent. This will be one that understands the differences between projects in your particular industry. They should help you determine what unique risks and issues your project could run into and protect you from them.

Look At Risk Exposure

When you are trying to determine what your project should be protected from, you need to see what risks it has. This could mean knowing it has a higher risk of fire than other sites. Or that it has a much higher risk of theft.

Think about all the risks during transportation when it comes to getting materials to and from the site. No matter what level of coverage you choose, the goal is to protect people with a financial interest from harm. As long as that goal is met, your insurance is good.

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