Three Reasons to Buy Builders Risk Insurance
There are many benefits to building with builders risk insurance, but you must consider the costs involved before purchasing a policy. This type of insurance covers the property and transit damages that occur during the construction process. This insurance may be more expensive than general liability insurance, but it is an excellent option if you plan on hiring subcontractors. Here are three reasons you should consider purchasing builders risk insurance for your building project. Read on to learn more. Here are a few things to consider when choosing builders risk insurance:
Builder’s risk insurance is a type of construction insurance
Builder’s risk insurance policies cover the site where a construction is taking place. These policies cover all the materials and supplies used on the construction project, as well as any lost or damaged materials in transit. They may also cover the cost of temporary structures such as scaffolding and other temporary structures, as well as the cost of architect fees and additional real estate taxes. In some cases, the policy may also cover equipment or machinery used on other construction projects.
Cost-wise, builders risk insurance policies cost anywhere from one to five percent of the total cost of a construction project. Coverage amounts are based on the cost of the materials and equipment, and the duration of the project. The longer the construction project, the more expensive the insurance policy will be. Additionally, the environmental conditions of the construction site may impact the cost of the policy. Therefore, it’s essential to discuss the cost of coverage with an insurance agent or broker.
It covers property damage
In addition to covering property damage that may result from a builder’s negligence, builders risk insurance policies also cover materials stored off-site or lost during transit. Additional coverage options may include pollution cleanup, demolition debris, and expenses for re-architecting or engineering. These options are typically only available in the form of policy extensions, and they provide added protection. Depending on your needs, you can upgrade your builders risk coverage to get comprehensive protection.
Builders risk insurance policies come with different limits and benefits, but they all provide the same protection for property damage that may arise from construction projects. In most cases, buyers should buy builders risk insurance policies directly from the underwriting insurer. However, this option can be limiting, especially for large projects that may involve numerous subcontractors. Furthermore, it’s essential to protect the lender – the bank – by including them on the builders risk policy.
It covers transit
Most builders risk insurance policies cover property that is in transit, but not in its permanent location. Some policies extend coverage to scaffoldings and temporary structures. Another policy option is valuable documents coverage, which protects site plans and blueprints. Each policy will have different exclusions, but most of them cover property in transit, including earthquakes and floods. It is important to find out what your policy will cover and what it does not.
Make sure to read the fine print of the policy before signing on the dotted line. Make sure to double check all coverages and identify gaps. Work with an insurance agent or broker to find a policy that fits your needs. It is also important to choose a builder’s risk insurance company that offers a variety of coverage options. You can also get multiple quotes from different providers, which will help you compare and contrast the various policies available.
It costs more than general liability insurance
Compared to general liability insurance, builders risk insurance policies are more expensive but offer additional benefits. Typical exclusions include earthquakes, employee theft, water damage, weather damage to property that is in the open, and government action. Additional coverage can also include debris and pollutant cleanup, as well as re-architect/engineering costs and labor expenses. These extras make builders risk insurance policies more expensive, but they’re worth it in the long run.
General liability insurance protects property, while builder’s risk is only used while the building is under construction. If you’re working on a large project, you may need both types of coverage. The difference is significant, especially if you’re not sure if you need a mix of both. In addition, homeowners insurance covers liability protection for you and your family, as well as additional living expenses, if a disaster occurs.