Coverage designed to protect active construction projects, as well as tools and equipment left on job sites, builders risk offers protection against financial loss in the event of a natural disaster, theft, or vandalism.
Also known as course of construction insurance, this coverage can seem complicated but what it comes down to is really quite simple: builders risk insurance protects your investment on active job sites.
Here are 7 facts that every contractor should know about builders risk coverage.
1. What Builders Risk Covers
A specialized form of property insurance, builders risk policies don’t cover a structure after construction is finished, but rather structures that are being remodeled or under new construction.
Course of construction insurance doesn’t cover buildings that are undergoing small repairs, but is designed to offer protection for commercial or residential buildings that are under major reconstruction, as well as new builds.
2. Who is Covered with a Builders Risk Policy
While a general contractor is generally the one to take out builders risk coverage, they are not the only one to enjoy the protections of the policy.
Owners, developers, and subcontractors are all protected as “named insureds” on a builders risk policy. The best thing about this inclusive coverage is the way it creates a work environment of mutual protection where – should accidents, vandalism, or theft occur – there will be no need for finger pointing or hard feelings as all parties will be covered.
3. Builders Risk Covers Vandalism and Theft
Should your job site become a target for thieves or vandals, builders risk has you covered. From small tools to large equipment that go missing in the night, to spray painted structures, theft or vandalism at the job site generally falls under this coverage.
Even if the worst should happen and the completed portion of the project should be the target of arsonists, builders risk can cover your investment for the supplies and time it takes to rebuild, as well as the costs to get the job site back to the starting line.
4. Clean-up Costs are Covered
If a disaster befalls your structure – be it a weather phenomenon, natural disaster, or vandalism – builders risk insurance generally covers demolition expenses so you can clear away debris and begin rebuilding.
It’s painful enough watching your hard work destroyed and having to start from square one, without the added discomfort of breaking your own bank to get there. With course of construction coverage, you’re able to focus on getting your project back on track as soon as possible and without the worry of juggling the expenses.
5. Coverage for Your Materials, Supplies, Tools and Equipment
From scaffolding and construction forms to blueprints and site plans to hammers and Bobcats, builders risk insurance generally covers all of the tools, equipment, materials or supplies on the job site that are damaged or go missing.
Perhaps it’s a big job that your crew is returning to day after day so most of your tools and equipment are left there overnight regularly, and then one evening a fire spreads from a neighboring house and burns the structure to the ground. With builders risk insurance, you don’t have to worry about the cost to replace the essential tools, materials, and supplies that were damaged onsite.
With course of construction insurance you are covered for these losses and don’t have to replace all of your ruined tools and equipment out of your own pocket.
6. Policies are Available in Varying Durations
Builders risk insurance covers a project during the construction phase, and no longer.
When you’re done building, the coverage ends.
Sometimes it’s hard to know how long a project will take to complete. Unexpected building delays such as adverse weather, employee sickness, permit issues, or any number of other issues can slow a project down.
That’s why you go into your builders risk policy with the best of intentions and closest estimate you have for when the job will be complete – 6, 9, or 12 months, for instance – and then extend your coverage in the event that the project takes longer than expected.
7. There’s Few Exclusions to Coverage
Aside from incidents that are specifically excluded from a policy, most course of construction coverages are “all-risk” policies.
Outside of items that are specifically outlined when you’re setting up your policy, builders risk covers a vast range of accidental damages that could occur on your job site.
Be sure to have a thorough understanding of your coverages and also your exclusions so that, should the worst occur, you know where you stand with your builders risk coverage.
While builders risk insurance is not required by law, it just makes good sense to use the protections offered by this coverage. There is no worse time to get caught without coverage than when you’re up against a deadline and struck by unexpected bad luck.
Rather than letting it stop you in your tracks, builders risk coverage will keep your project, and business, charging full steam ahead.