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Builders risk insurance acts as a specialized form of property insurance for properties under construction. While property owners can obtain this policy, it is often required that contractors secure it to ensure comprehensive protection during the building process.
This insurance typically covers damages from events such as fire, hail storms, theft, and vandalism (excluding acts by employees), as well as damage caused by vehicles or aircraft. Coverage levels are generally set at a fixed percentage of the total construction budget, ensuring adequate protection. It’s important to note the policy duration, as extensions beyond the initial construction timeline are usually limited.
Protects the structure under construction.
Covers legal liabilities arising during the construction.
Insures against mechanical failures of construction
equipment.
Covers costs related to changes in construction laws or regulations.
Both clients and contractors should consider this essential coverage. Property owners, contractors, subcontractors, lenders, and architects commonly obtain builders risk insurance to protect their interests during the construction process.
Builders risk insurance typically does not cover increased risks such as flooding in coastal areas or earthquakes near fault lines unless specifically included. It also excludes injuries to workers, necessitating separate workers’ compensation insurance.
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