Restoration Risk Management: Builders Risk Insurance
Though not common, there are some scenarios where restoration contractors need to purchase builders' risk insurance policies to protect their work properly.
What Is Builders Risk Insurance?
Builders risk insurance, also called “course of construction,” insurance is a type of property coverage for buildings under construction, as well as all of the materials and equipment used in the project. You will typically need to purchase coverage for 100 percent of the anticipated construction costs.
The coverage can be essential if you are working with materials prone to damage or working in an area prone to certain types of severe weather. It is also important coverage that protects your investment from unforeseen risks. Be sure to work with a knowledgeable commercial insurance agent when choosing the type and amount of builders risk coverage you need.
What Builders Risk Insurance Covers
Your builder's risk insurance policy can be structured to cover the following:
Property damage: Includes construction material, heavy machinery and equipment, temporary structures, cribbing, falsework, fencing, scaffolding, construction signs, and landscaping.
Theft: Some builders risk insurance policies will cover theft of building materials; to get this coverage, you may need to have a gated job site
Labor costs and earned profits: Replaces labor costs, income, and expenses.
Perils of nature and human-made disasters: Hurricanes, fires, blizzards, severe hail storms, lightning, blackouts, broken water mains
Other damages: Negligent workmanship, flawed materials or design
Some coverage will be part of a basic policy, and other items will need to be added. You must work through the details of a policy beforehand. A Trusted Choice member agent can help you create a policy customized to the project you are working on. Independent agents can give you access to multiple companies and policies and direct you to the strong companies in the areas you are most concerned about insuring.
What Is Excluded from a Builders Risk Insurance Policy?
Note that these policies do not cover accidents and injuries at the workplace or liability risks. They will also exclude certain acts of nature, such as earthquakes and floods.
Typically you can buy flood insurance and earthquake insurance separately. Be sure to work with an agent who will help assess your risks and review your coverage carefully.