Builder’s Risk Insurance Policies: Key Things to Know
Builder’s risk insurance, also known as course of construction insurance, is a specialized policy designed to protect buildings under construction, renovation, or major repair. It provides coverage against damage or loss caused by events such as fire, theft, vandalism, and certain weather-related perils during the construction period. First Choice Agency provides builder’s risk insurance in Bayside, Brooklyn, Bay Shore, Babylon, Deer Park, Queens, NY and surrounding areas.
- What It Covers:
Builder’s risk insurance typically covers the structure being built, materials on-site, and temporary structures such as scaffolding or construction trailers. The policy can also include coverage for supplies stored off-site but intended for the project. Coverage generally applies until the project is completed and a certificate of occupancy is issued.
- Who Needs It:
This insurance is important for property owners, contractors, and subcontractors involved in construction projects. It protects financial investments from unexpected events that could halt or delay progress. Lenders may also require builder’s risk coverage before funding a project.
- Covered Perils:
Standard policies usually cover risks like fire, lightning, wind, hail, explosion, vandalism, and theft. Some policies offer optional coverage extensions for things like earthquakes, floods, or faulty workmanship, though these often require additional premiums.
- Exclusions:
Builder’s risk policies generally exclude damages caused by poor design, planning errors, wear and tear, mechanical breakdowns, employee theft, or defects in materials or workmanship.
- Policy Duration:
These policies are typically issued for a set term, often 6, 12, or 24 months, aligned with the expected project duration. Extensions can usually be purchased if construction takes longer than planned.
- Importance of Accurate Valuation:
It’s crucial to accurately estimate the total project value when purchasing coverage. Underestimating may result in inadequate compensation, while overestimating increases premiums unnecessarily.
Builder’s risk insurance offers vital financial protection, ensuring construction projects can recover from unforeseen setbacks without severe financial strain. Interested in discussing this further? Call or email us anytime!