Are you aware that there is such a thing as builder’s risk insurance? Yes, builder’s risk insurance is also called Course of Construction insurance and it is a type of property insurance that covers a building and the materials to be used in it while under construction. Policies exist for three-month terms, six-month terms and twelve-month terms. However, the policy can be extended if the project is not completed by the time the policy term expires.
It is this insurance that will provide reimbursement for damages in the property, until the limit stipulated in the coverage. The total limit of the coverage should include the completed value of the entire property except for land value. As such, the limit of the insurance is best determined by looking into the budget of the whole construction project.
What is covered in builder’s risk policy? Damage on the structure that is caused by any of the following is covered:
• Fire
• Wind in coastal areas
• Theft
• Hail
• Lightning
• Explosion
• Vehicles
• Vandalism
However, exclusions for the following may exist, but vary from policy to policy:
• Earthquake
• Water damage
• War
• Employee theft
• Government action
Then again, these exclusions can be included in the policy as add-ons.
• If the policy terms do not specify it, the insurance will not cover property damage of others as and damage to tools and equipment.
• Sub-contractors need to have their own insurance.
• Accidents that happen on the job site are not usually covered.
• For renovations and additions to existing structures, the existing property insurance of the owner can cover the additional construction.
• A performance bond for most New Jersey public projects and a payment bond are some of the surety bonds a Philadelphia public construction project can be required of by building owners. Builders risk insurance in Bucks County is generally requested by building owners but some contractor’s license bonds in Montgomery County will do if both the builder and the owner agree on the terms included in the bond.
• Lastly, to avoid delays after a public project is awarded, a property owner should ask for proof of business liability insurance in Philadelphia.
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