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Builder’s Risk Insurance: What Every Contractor Should Know About It

Posted by David Ross on Sun, Jul 21, 2019

save-on-builders-risk-insurance-300Insurance is a way to protect the things you have of value – vehicles, employees, buildings, etc. But what if you’re in the process of building or remodeling a structure? Does it have any value? Of course, it does, and it is susceptible to damage just like anything else, which is where Builder’s Risk Insurance comes into play. 


According to the National Fire Protection Association, between 2010 and 2014, fires in structures under construction resulted in $172 million in property damage every year, and fires in structures undergoing major renovation resulted in $108 million in direct property damage each year. And that’s just fires. Structures can also be damaged by vandalism, theft, severe storms, and more.

Therefore, it’s imperative that you protect these project just as you would anything else of value. Here’s what you need to know about Builder’s Risk Insurance. 

What Is Builder’s Risk Insurance?

Builder’s Risk Insurance (Aka Course of Construction) is temporary coverage for damage or loss to a structure that is being constructed or renovated.

If your existing property insurance doesn’t cover renovations or additions, Builder’s Risk Insurance can fill that gap. Most owners and lenders, along with most local, county, and state building and code enforcement agencies will require a contractor to have builder’s risk insurance.

Property owners, builders, financial institutions, contractors, or development/investment companies typically purchase Builder’s Risk Insurance, and additional parties may also be protected under an additional named insured clause.

Builder’s Risk Insurance is usually purchased before or on the date of construction when the contract is signed. If purchased after construction begins, the percentage of the work is completed will be considered.

These policies can be written in three, six, or twelve months terms, and can typically be extended (one time) if a project is not done on time.

What Does Builder’s Risk Cover (and Not Cover)?


Builder’s Risk insurance may just cover the structure, or it may also include materials and/or equipment used in the project. Each policy is different, so it’s essential to understand what a policy covers and doesn’t cover.

Typically, Builder’s Risk Insurance covers damage from the following:

  • fire
  • wind
  • theft
  • lighting
  • hail
  • vandalism
  • vehicles/aircraft
  • explosions

Typically, Builder’s Risk Insurance does not cover damage resulting from faulty design, planning, workmanship, and materials. Professional Liability insurance usually covers that type of damage.

Plus, Builder’s Risk Insurance usually doesn’t cover workplace injuries or liability. Other standard exclusions include the following:

  • employee theft
  • water damage
  • weather damage to property in the open
  • earthquake
  • war
  • government action
  • mechanical breakdown

What Is the Cost of Builder’s Risk Insurance?

The limit of the policy should reflect the total completed value of the project – including materials, labor, and overhead but excluding land cost. You can also insure a percentage of the building profit.

Typically, the best way to determine the best amount of coverage is to look at the construction budget. If changes result in an increase in the value of the structure, you should contact your insurance provider, so the policy can be endorsed to reflect the new value.

The cost generally runs between one and four percent of total construction costs.

How Do You Purchase Builder’s Risk Insurance?

Every construction project has a lot of moving parts, and each project is different. Your first step should be to find an agent with experience in contractor’s insurance like the agents at American Insuring Group.

Here is the basic information you should be ready to provide your agent:

  • Insured name and mailing address
  • Builder information – name, years of experience, number of structures built or remodeled in the last year and the projected number of projects for the next year, and loss history
  • Property information – address, square footage, number of stories, total completed value, type of construction material, and fire protection class

Here’s How to Get the Best Price on Builder’s Insurance

If you want to ensure the proper coverage, limits, and policy type are in place for your next project, give American Insuring Group a call at (800) 947-1270 or (610) 775-3848 or connect with us online. Not only do we specialize in contractors insurance, but we are also independent agents, which means we thoroughly check e and compare pricing and coverage with multiple companies to ensure that you get the best price and quality protection!

Tags: Builders Insurance, Construction Insurance, Construction Risk Insurance, Contractor Insurance

Workers Comp Insurance & Protecting Workers from Asbestos

Posted by David Ross on Mon, Mar 30, 2015

Protecting employees from the hazards of asbestos exposure is the right thing to do, and it can help lower workers comp insurance costs, too. Serving Philadelphia, Lancaster, Lebanon, Reading, Allentown, Harrisburg, York, Pittsburgh, Erie, PA and beyond.You say you have good business insurance, and that you've taken the time to obtain the right workers compensation insurance protection for your employees and your business. Good for you!

But, have you taken all the proper precautions to protect your construction workers or other employees from asbestos exposure? Doing so is the right thing to do for their protection, and over time it could also lower your workers compensation insurance costs.

What is Asbestos?

Asbestos is a naturally occurring mineral-based material that is widely used in many building products because it is resistant to heat and corrosive chemicals and does not conduct electricity. Asbestos fibers are very fine and can remain suspended in the air for hours. Asbestos comes in all shapes, sizes, and colors, and it’s extremely difficult to see. 

Asbestos that is in good condition and undisturbed is safe, but scientists have confirmed that when asbestos materials start to rot or are disturbed by cutting, scraping, drilling, or sanding, toxic fibers are released into the air.  Once breathed in, these tiny fibers (1,200 times thinner than a human hair) can get trapped in the lungs and remain there for a long time.  As these fibers accumulate, they cause scarring and inflammation, which can affect breathing and cause significant health problems.

Asbestos has been classified as a carcinogen (cancer-causing substance).  Continued exposure to asbestos can cause mesothelioma (a cancer that affects the membranes lining the lungs and abdomen), asbestosis (scarring of the lungs, which causes a loss of lung function that often progresses to disability and death), lung cancer, pleural plaques, and cancers of the esophagus, stomach, colon, and rectum. 

Often, the symptoms don’t appear until many years after the first exposure (20-50 years is the average gap).  Even short-term exposure to a significant amount of asbestos can lead to breathing problems, coughing, and shortness of breath.  And, there is evidence that family members of workers heavily exposed to asbestos face an increased risk of developing mesothelioma, as a result of exposure to asbestos fibers brought into the home on the shoes, clothing, skin, and hair of workers. According to the World Health Organization, 43,000 people die annually from asbestos (10,000 Americans).

Banned in 55 Counties

Asbestos has been banned in 55 countries.  Its use is restricted in the U.S. (asbestos must account for less than 1 percent of the product.), but it has not been banned.  Two million metric tons of the substance are produced every year worldwide. Many U.S. companies have phased out most products that contain asbestos; however, asbestos building materials still exist at many jobsites – especially homes and commercial buildings built before the 1970’s.  In 1989, the U.S. Environmental Protection Agency (EPA) banned all new uses of asbestos; however, uses developed before 1989 are still allowed.  

Why Construction Workers are at Risk:

Everyone is exposed to asbestos at some time during their life.  Low levels of asbestos are present in the air, water, and soil.  However, most people don’t become ill from their exposure.  People who become ill from asbestos are usually those who are exposed to it on a regular basis. 

Throughout the twentieth century, asbestos was incorporated into thousands of construction products, including fire retardant coatings, concrete and cement, bricks, pipes, gaskets, insulations, drywall, flooring, roofing, joint compound, paints, and sealants. Asbestos is a serious risk for construction workers of any trade.  Demolition workers who unsafely dispose of asbestos experience some of the highest risks.  Roofers, electricians, drywall workers, painters, plumbers, and laborers all face regular exposures, but anyone working on an older structure should be cautious of asbestos.

According the National Institute for Occupational Safety and Health, nearly one-quarter of worker deaths caused by asbestosis between the years 1990-1999 were in the construction trades, by far the most dangerous industry in terms of asbestos exposure.

If your employees perform any of the following tasks, they are at risk of breathing asbestos fibers:

  • Cut, drill, sand, or otherwise disturb textured wall/ceiling material or drywall that contains asbestos
  • Collect asbestos samples for laboratory analysis
  • Remove or repair pipe insulation that contains asbestos
  • Strip electrical wiring that contains asbestos insulation
  • Remove ceiling tiles that contain asbestos
  • Drag cable or wiring through asbestos-containing vermiculite insulation or ceiling tiles, or through asbestos-cement conduit
  • Remove vinyl floor tiles or linoleum that contains asbestos
  • Demolish concrete block that contains asbestos-containing vermiculite insulation
  • Remove asbestos-containing asphalt roofing materials

How Can You Protect Your Employees from Asbestos?

  • Read and understand the U.S. Occupational Safety and Health Administration (OSHA) regulations covering asbestos exposure in general industry and construction www.osha.gov/SLTC/asbestos
  • Train employees who will be working with and around asbestos, including
    • How to recognize asbestos-containing materials http://www.hse.gov.uk/asbestos/gallery.htm
    • Awareness of the health hazards of asbestos
    • Proper use of personal protective equipment
    • Proper handling, removal, and disposal of asbestos
    • Develop and implement an exposure control plan for asbestos work
    • Have qualified people conduct risk assessments for any asbestos-containing materials that might be disturbed
    • Ventilate workspaces
    • Monitor employees for asbestos exposure levels
    • Keep warning signs and instructions in areas where asbestos-related work is performed
    • Require protective clothing, such as overall, gloves, foot coverings, face shields, and goggles.
    • Use protective equipment , such as respirators
    • Supply shower facilities and other post-exposure precautions
    • Require medical examinations for workers who are exposed to high levels of asbestos

Having the Right Health Insurance and Worker's Comp Insurance Pays Off

If one of your employees still becomes ill from exposure to asbestos while working for you, the right insurance – both liability, health, and workers’ compensation insurance – will help ensure the best care with the least financial impact. 

We're Here to Help

To determine your business insurance needs, contact American Insuring Group at (800)947-1270 or (610)775-3848.  We're independent insurance agents who offer insurance from over 25 competing brands. We’ll make sure you have the right coverage for your business at the right price. Contact us today.

Tags: Workers Compensation Insurance, Construction Insurance, Construction Risk Insurance, Contractor Insurance, workers comp, workers comp costs

3 Business Insurance Must-Haves for the Construction Industry

Posted by David Ross on Thu, Feb 19, 2015

3 Construction Insurance Must-Haves

Must-have construction insurance tips for Reading, Philadelphia, Lancaster, Harrisburg, Allentown, Pittsburgh, Erie, State College, PA and beyondWhether you’re a subcontractor or a general contractor – whether you build small backyard sheds or giant commercial buildings – whether you’re a one-man remodeling business or a multi-million dollar construction company, there are three types of insurance you need to consider.  In other words, the size of your business and the size of the project make little difference.  If you want to protect your investment, your employees, and even your business, there are three types of commercial insurance to consider: Liability Insurance, Builders Risk Insurance, and Flood Insurance. 

Commercial Liability Insurance (A.k.a. Commercial General Business Liability Insurance)

Commercial Liability Insurance is a critical part of any business’s insurance portfolio and particularly pertinent in the construction industry where accidents and injuries are more common. Commercial Liability Insurance protects you and your company if someone gets hurt on your property or if you or an employee causes property damage or injury on a job site.  This insurance helps cover medical and legal defense costs and settlements if you are sued.  Extended litigation (including attorney fees and court costs) can quickly deplete your cash reserves - even if the claims are found to be unwarranted.  

The amount of liability insurance is proportionate to the cost of the project.  Generally, you should have coverage that is two to three times the amount of the construction project budget.  In addition, businesses with higher risk for damages, such as roofing contractors, may need higher coverage.

Before you begin to build, repair, or remodel any structure – even as a subcontractor - common business standards require that you provide evidence of liability insurance.  Adequate General Liability Insurance safeguards your business – even in today's litigious environment.

Builder’s Risk Insurance (A.k.a. Course of Construction Coverage)

Builder’s Risk Insurance (construction insurance) is property insurance that covers damage to a building during construction.  It may cover just the structure itself, or it can include materials, fixtures, and/or equipment being used in the construction or renovation of the building.  Lending and municipal authorities will often require this insurance, and it can apply to both new construction and remodeling projects.

Most Builder’s Risk Insurance policies cover damage caused by fire, wind, lightning, hail, theft, vandalism, and damages by aircraft and vehicles. Items that generally are not covered include damage due to earthquake, employee theft, water damage, and mechanical breakdown.  Damage resulting from faulty design, planning, workmanship, or materials is rarely covered, and it’s important to note that Builder’s Risk insurance doesn’t cover tools and equipment or the property of others (that’s why it’s important for sub-contractors to have their own insurance).

Flood Insurance

Flood insurance is typically covered by the National Flood Insurance Program and usually has a 30-day waiting period before entering its coverage period.  This is done so the insurance isn’t purchased only when a flood is expected. 

Flood insurance is required in high-risk areas and strongly recommended in moderate-to-low risk areas.  It normally covers damage caused by tidal waves, overflow of inland water, unusual accumulation of runoff water, and water exceeding normal levels. 

 

We're independent insurance agents serving offering quality construction insurance protection for Philadelphia, Reading, Pittsburgh, Erie, Harrisburg, State College, Lancaster, Lebanon, Allentown, Lehigh Valley, Pennsylvania and beyond.For more customized information about your construction insurance or contractor insurance needs, contact American Insuring Group at (800) 947-1270 or (610) 775-3848. We'll help get you the right coverage for your projects at the right price. That's because we're independent agents offering over 25 competing brands of insurance, so we're free to find you the best deal in quality insurance protection. Contact us today.

 

 

Tags: Builders Insurance, Construction Insurance, Construction Risk Insurance, Contractor Insurance, Flood Insurance, Commercial Insurance Allentown PA, Commercial Insurance Harrisburg PA, Commercial Liability Insurance, Commercial Insurance, Business Insurance, Commercial Insurance Philadelphia PA

Do You Need Builder’s Risk Construction Insurance?

Posted by David Ross on Tue, Nov 04, 2014

What is Builder's Risk Insurance?


Builder's Risk Insurance - We offer construction insurance coverage in Philadelphia, Lancaster, Reading, Allentown, the Lehigh Valley, Harrisburg, Pittsburgh, Erie, State College, York, Lebanon, Hershey and surrounding areas. Call us for a free quote.Builder’s Risk Insurance (a.k.a. Course of Construction Coverage) is property insurance that covers damage to a building during construction.  It may cover just the structure itself, or it can include materials, fixtures, and/or equipment being used in the construction or renovation of the building.  

Why Builders and General Contractors Need It

Builder’s Risk Insurance is often required by lending and municipal authorities. It can be required as a condition of many contracts, and it can apply to both new project construction and remodeling projects.  It protects the custom builder or general contractor from financial loss due to damage.  Builder’s Risk Insurance is sometimes purchased by the ultimate owner of the property, the lending institution, or others.

What Does it Cover and How Much Insurance is Needed?

Most Builder’s Risk Insurance policies cover damage caused by fire, explosions, lightning, hail, theft, vandalism, and damages by aircraft and vehicles. The amount of coverage should represent the total value of the structure, including labor costs and the cost of raw materials; however, the cost of the land value should not be included.  The construction budget is a good way to determine the amount of coverage needed.

It is normally taken for a period of three, six, or twelve months, but can be extended if the duration of the construction exceeds the duration of the policy, but only one extension at a time is possible.  Builder’s Risk insurance is intended to cover unforeseen damage during the construction period only.  Coverage should be effective prior to when the materials are delivered to the job site.

Once the work has been completed and the property is ready for use or occupancy, the policy terminates.  Once the Builder’s Risk coverage has expired, the new owner should take out permanent property insurance, such as a home owner’s insurance policy or a commercial property insurance policy.

What Doesn’t it Cover?

Generally, Builder’s Risk Insurance does not cover damages caused by earthquakes, employee theft, water damage, contract penalty, flood, wind, war, government intervention, damage to property left in the open, or machinery breakdown.  It also doesn’t cover damages that occur as the result of inferior quality materials, inefficient design or planning, or faulty workmanship. 

Tools and equipment are not covered.  Builder’s Risk Insurance doesn’t cover for liability or accidents that occur at the site.  It’s also important to note that Builder’s Risk insurance doesn’t cover property belonging to other people, such as sub-contractors. 

Coverage Extensions for Builder's Risk Construction Insurance

Sometimes coverage extensions are needed or recommended, such as… 

  • Property in transit to worksite
  • Scaffolding while located at the insured location and pertaining to the insured company
  • Property in temporary storage that will be used or installed in the insured location and pertaining to the insured company
  • Debris removal that’s a result of damage caused by a covered incident
  • Valuable papers, such as site plans or blue prints.

Get the Right Construction Insurance

Contact us for Builder's Risk Construction InsuranceWhether you need general contracting insurance, contractor workers’ comp, builder’s risk insurance, or any other type of insurance, we have you covered.  We’ll take a close look at your business; recommend the right insurance for you, then (after shopping many competing insurance brands) offer you the best insurance protection at the best price.

To get started with the right contractor insurance for your business please contact us at (610) 775-3848 or (800) 947-1270

Tags: Builders Insurance, Construction Insurance, Construction Risk Insurance, Contractor Insurance, Construction Equipment Insurance, Commercial Insurance