Builders, contractors, and property owners face various risks when they undertake construction projects. These risks include theft, vandalism, fires, natural disasters, and other perils that could damage the building or its components. To protect against these risks, builders and property owners can purchase builder’s risk insurance. Now, it’s in your best interest to be as informed as possible about this type of insurance. To make things easier for you, we will be discussing everything you need to know about builder’s risk insurance.
What Is Builder’s Risk Insurance?
Builder’s risk insurance is a type of property insurance that provides coverage for buildings and structures under construction. It is designed to protect against damage to the building, its components, and materials during the construction process. The coverage typically includes damage caused by fire, lightning, wind, hail, explosions, theft, and vandalism. It may also cover additional perils, such as earthquakes and floods, depending on the policy.
Who Needs Builder’s Risk Insurance?
Builder’s risk insurance is essential for anyone who is involved in a construction project, including builders, contractors, property owners, and developers. It protects them from financial losses that could arise from damage to the building or its components during the construction process. It is important to note that the coverage only applies during the construction period and ends when the project is completed.
What Does Builder’s Risk Insurance Cover?
Builder’s risk insurance covers the building, its components, and materials during the construction process. The coverage typically includes the following:
- The Building: This includes the structure and any fixtures that are permanently attached to it.
- Materials: This includes any materials that are used in the construction process, such as lumber, concrete, and steel.
- Equipment: This includes any equipment that is used in the construction process, such as cranes, bulldozers, and excavators.
- Temporary Structures: This includes any temporary structures that are used during the construction process, such as scaffolding and temporary buildings.
What Does Builder’s Risk Insurance Not Cover?
Builder’s risk insurance does not cover everything related to a construction project. Some of the things that are typically not covered by builder’s risk insurance include:
- Liability: Builder’s risk insurance does not cover liability claims that may arise from the construction project. For example, if someone is injured on the construction site, this would be covered by a separate liability insurance policy.
- Property Damage: Builder’s risk insurance does not cover damage to property that is not part of the construction project. For example, if a neighboring building is damaged during the construction process, this would be covered by a separate property insurance policy.
- Professional Liability: Builder’s risk insurance does not cover claims that may arise from professional services provided by architects, engineers, or other professionals involved in the construction project. This would be covered by a separate professional liability insurance policy.
How Much Does Builder’s Risk Insurance Cost?
The cost of builder’s risk insurance depends on various factors, including the type of construction project, the location, the value of the building, and the coverage limits. Typically, the cost of builder’s risk insurance is a percentage of the total construction cost. This percentage can range from 1% to 5% of the total construction cost. For example, if the total construction cost is $1 million, the cost of builder’s risk insurance could be between $10,000 and $50,000.
Conclusion
Builder’s risk insurance is essential for anyone involved in a construction project. It provides coverage for the building, its components, and materials during the construction process. It protects against damage caused by fire, theft, vandalism, and other perils that could result in financial losses. When purchasing builder’s risk insurance, it is important to understand what is covered and what is not covered, as well as the cost of the policy. By doing so, builders, contractors, and property owners can ensure that they are adequately protected during the construction process.
Pascal Burke Insurance Brokerage Inc. is the best place for your insurance needs. Contact us to speak with builder’s risk insurance in Louisiana!