What is Builder’s Risk Insurance and what does it cover?

Builder’s Risk Insurance, or Course of Construction insurance, is a property insurance that covers a building still under construction. Not only is the building covered in this type of insurance, the materials to be installed in it are covered as well.  

It is this kind of insurance that will pay for damage to the building, of course, up to the coverage limit. Regarding the limit, it is based on the value of the completed structure except for the value of the land it is standing on. Thus, the full construction budget is the best gauge of the limit of the insurance. 

An insurance policy can be written in three, six or twelve month terms. However, the policy can be extended if the project is not yet completed when the policy ends. 

Coverage

Such a policy can cover damaged brought about by certain events. These events include fire, theft, lighting, hail, explosion, wind, vehicles and vandalism. On the other hand, there could be exclusions, which can vary from policy to policy. Usually, these exclusions may include water damage, war, earthquake, government action, employee theft, and other events which may be outlined in the policy. Then again, some of these exclusions can be added as policy add-ons. 

In some situations, extensions of the coverage may be allowed, but limited. Usually, the coverage extensions may include scaffolding, property in transit, property in temporary storage, debris removal, fire department service charges, sewer and drain backup, and loss of valuable papers. 

Additional Information

You must remember that builder’s risk insurance may not cover damaged properties of others, including tools and equipment not stipulated in the policy terms. Plus, sub-contractors need to have their own insurance. You should also take note that this type of insurance does not usually cover liability when accidents occur on the job site.  

It is also good to take note that renovations on an existing property does not require a new policy as the current insurance may cover the construction work. Only new buildings built in vacant lots should have builder’s risk policy. 

Certain municipal projects could require the contractors to get third party surety bonds. As such, a performance bond for most New Jersey municipal projects and a payment bond are the few surety bonds a Philadelphia municipal construction project should have.

Usually, builders risk insurance in Bucks County is requested by the building owner. But then, some contractor’s license bonds in Montgomery County will do if the contractor and the building owner can agree on the terms found in the bond. In this case, the building owner should request the contractor to show a copy of the documentation as evidence that business liability insurance in Philadelphia was secured during the bidding.

8:22 AM Share: