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Builder’s Risk Construction Insurance FAQs

There are many types of Construction Insurance policies to choose from; however, one of the most popular remains one of the most misunderstood. Contractors usually shop for Builder’s Risk Insurance based on the price, not the coverage. That can lead to heavy losses due to inadequate protection. How can you avoid ending up in such a situation? In this article, let’s answer some of your most common queries about Builder’s Risk Insurance.

Builder’s Risk Basics

There is no denying that Builder’s Risk Insurance is economically attractive. Premiums are only between 1% to 5% of your project’s cost. However, it could cost you dearly if you don’t choose the right Construction Insurance policy.We at Contractors Liability have 20+ years of experience in Construction Insurance. We provide tailored Builder’s Risk Insurance policies that meet your needs and protect your business. Our trusted industry experts always help you make the right decision.

Frequently Asked Questions About Builder’s Risk Insurance

What is Covered by Builder’s Risk Insurance?

Builder’s Risk Insurance is specialized coverage that protects the building under construction and the equipment used to build it. Your Construction Insurance policy will also cover:

  • Profits.
  • Debris removal.
  • Contamination cleanup.
  • Loss of valuable documents such as blueprints.
  • Delays or losses due to building code changes.

How Much Will Builder’s Risk Cost?

The project cost will be the most significant determining factor for your insurance cost. Most insurance providers charge anywhere between 1% to 5% of the total project cost. However, there are a few other factors that you should consider as well. Risk increases as your project’s length increases, meaning that Construction Insurance costs will be higher for long-term projects. Construction in areas prone to natural disasters will also lead to higher insurance premiums. Projects that use frame structures will also be more costly because such structures are more susceptible to wind and fire damage.

How Can You Save Money On Builder’s Risk Insurance?

  • Have a solid safety record: Your insurance agent will use your safety track record to compute your premiums. Therefore, if your business has made claims in the recent past, you will more likely pay higher premiums. Emphasize safety measures to workers on your construction sites. Prevention is better and cheaper than cure.
  • Assess your risks: There is no one-cover-fits-all for Builder’s Risk. Take the time to assess the risk you should cover based on the type of construction, the geographical location, and weather patterns in that area.
  • Get a tailor-made cover: Select an insurance broker or agent who understands the nature of your construction business and the geographical area where you are situated. You get the best Builder’s Risk insurance advice on cost savings from an agent familiar with what your state and region’s insurance companies have to offer.

Who Should Buy Builder’s Risk Insurance?

All new construction and most major renovation projects require Builder’s Risk Insurance. In addition to the builder, other parties exposed to potential losses may also have an insurable interest. However, there is no need to buy separate insurance. One policy will typically include the owner, general contractor, and subcontractors.

When Does Coverage Begin and End?

Builder’s Risk Construction Insurance usually takes effect on the date when all contracts are signed. However, terms can be altered to choose a particular date. As far as the coverage end is concerned, your policy will specify the conditions. Typically, this will happen when the building is handed over to the other party or put to its intended use.

Do You Need Policy Extensions?

The cheaper the cover, the lower the premiums; true. However, you will find that cheaper coverage limits the circumstances and types of damage, which may not protect your business well. A policy extension will include damage generally excluded from Builder’s Risk coverage. You may wish to consider such an extension if you face higher risk, such as construction in an earthquake-prone or coastal area.

Do You Need Other Construction Insurance?

Yes, You do. Builder’s Risk will cover you for damages done to ongoing construction and materials. However, in case of injury to your employees or other people, you are not covered. For different kinds of damage, you need these coverages:

  • General Contractor Liability: To protect your construction business from third-party claims on damage to property, injury, reputation, rented premises, and advertising mistakes.
  • Commercial Auto Insurance: To protect your business from the cost of repairs to work vehicles, medical expenses for injured employees involved in car crashes, and claims made by uninsured motorists involved in accidents with your work vehicles.
  • Workers Compensation: To protect your business and employees in case of injuries while on construction sites. This cover will pay medical bills, a percentage of lost wages, the cost of retraining if needed, or funeral expenses and death benefits in case of fatalities.

Construction Insurance Experts

Now that you know more about Builder’s Risk Insurance, you are ready to begin protecting your business. However, every construction project carries unique risks. Our experienced agents at Contractors Liability will help you get that unique policy for your project. Get started by giving us a call at 888-961-4558.

Avatar for John Brown
Written by: John Brown
John has more than 25 years of experience in the insurance industry. He grew from a star insurance producer to owning one of the largest agencies in the country; he's a reference regarding contractor's insurance, commercial insurance, and builders' risk insurance.