Builder's risk insurance, also commonly referred to as course of construction insurance covers the property that is under construction. The builder's risk insurance coverage will vary from one construction project to another due to the diversity and uniqueness in design and complexity of construction buildings. This coverage is necessary for builders as well as construction contractors as it covers for unforeseen.

When do you need builders risk insurance?

Builder's risk insurance is recommended for all builders carrying out construction projects as protection of investment from unforeseen risks. However, it is necessary for contractors dealing with materials that are fragile or prone to damage. It is also important for construction projects that are carried out in areas with severe weather changes that could risk damage of construction material.

Extent of coverage

To what extent does a builder's risk insurance coverage protect your investment? This policy offers the following coverage to builders.

• Property damage. This policy covers property such as construction materials, machinery and equipment, scaffolding, landscaping and temporary construction structures in case of damage.
• Theft. In some instances, the builder's risk insurance will cover theft of construction materials. However, before getting this coverage, the construction site should be protected against intruders through installation of fencing and a gate.
• Other damages. Natural disasters such as floods, fires, hailstorms and lightning as well as damage or losses as a result of workers' negligence in the course of construction work are also covered by this insurance policy.

Remember, due to the different needs of each construction project, the builder's risk insurance coverage can be tailored to meet the specific builder's needs. You can exclude or include some risks in the policy depending on the type of exposures experienced on the job site.

What is not covered?

It is important to note that the builder's risk insurance policy does not offer coverage for everything in a construction site. For instance, it does not offer coverage to other people's property. In case of third party damage, the builder will be required to handle the cost. Alternatively, one can acquire a general liability insurance coverage that covers third party property in the event of damage.

Builder's risk insurance covers construction material, labor costs and the complete value of the structure, but not the value of the land on which the project is carried out. It is only in force during the period insured and for which the building is under construction. The coverage can be extended where the period projected is shorter than construction period.

If you are looking to start building, make sure that you are insured with risk insurance. And for more information, talk with professional builders, like those at Vinmar Homes, for their experience and suggestions. 

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