There are many types of Contractors’ Insurance designed to protect your business from unforeseen circumstances. However, one type of insurance that is somewhat unique to the construction industry is Builders Risk Insurance.
What is Builders Risk Insurance?
Builders’ Risk Insurance - also called Course of Construction Insurance or Inland Marine coverage – is a temporary insurance policy that helps protect a renovation or new building while under construction. It typically covers a building, structure, materials, tools, and equipment on a job site, in transit, or stored elsewhere during construction or renovation.
The following perils are typically covered under a Builders’ Risk Insurance policy:
- Theft
- Vandalism
- Fire
- Explosion
- Vehicle accident
- Weather events, such as hail or lightning
Some Builders’ Risk policies also include the following perils:
- Costs incurred by delayed construction, such as lost rental income or loan interest
- Removal and disposal of pollutants
- Damage to temporary structures
- Changes required to meet environmental standards
The following perils are typically NOT covered under a Builders’ Risk policy:
- Wind
- Earthquake
- Flood
- Employee theft
- Normal wear and tear
- Mechanical breakdowns
- Terrorism
- Faulty work or materials
- Contractual penalties
When Does Builders Risk Insurance Coverage End?
Most insurance policies have an insurance policy period that includes an effective and expiration date. Simply stated, those dates indicate when coverage from that policy begins and ends. However, the end date of a Builders’ Risk Insurance policy can be a little more complicated.
Because the value of a structure being built or renovated increases over time, Builders’ Risk insurance factors this changing value into its pricing. Due to this unique situation, there are times when an expiration date may change.
- The owner of the property takes over
If an owner (such as the original property owner, bank, or purchaser) takes over the project (regardless of how complete the project is), the Builders’ Risk Insurance policy you purchased becomes invalid.
- The Project Is Abandoned
If the contractor walks away from the site with no intention of completing the project, the Builders’ Risk Insurance policy becomes invalid.
- The Property is Being Used for Intended Purpose
If all or part of the property is being used for its intended purpose during construction, the Builders’ Risk Insurance policy becomes invalid.
- The Project has been Completed for 30 Days
Once an occupancy permit or other completion confirmation has been issued, the Builders’ Risk Insurance policy becomes invalid.
Once the Builders’ Risk Insurance policy has expired, other types of insurance are available to protect the property, which are often less expensive. For example, property insurance can be purchased when the property is being used for its intended purpose or when the project has been completed for thirty days, which is typically less expensive than Builders’ Risk Insurance. On the other hand, if a property has been abandoned, there is more risk for damage such as decay, vandalism, break-ins, and arson. Therefore, insurance to cover the property will be higher than Builders’ Risk Insurance.
Need Help With Builders’ Risk Insurance?
If you have questions about Builders’ Risk Insurance or any type of Contractors Insurance, be sure to speak with one of the experienced agents at American Insuring Group.
Not only do we specialize in Contractors Insurance, but as independent agents, we also compare multiple insurance companies to ensure you pay the lowest premium for the coverage you need.
Call today at (800) 947-1270 or (610) 775-3848, or connect with us online.
