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Homeowners Insurance vs Builder’s Risk Insurance

Do you need Builder’s Risk Insurance for homeowners or Homeowner’s Insurance? 90% of property owners have some form of insurance. But there are key differences between Homeowners Insurance and Builder’s Risk Insurance.  In this article, let’s take a look at each individual policy. What they cover and the benefits to expect.

Builder’s Risk insurance for the homeowner

Builders Risk insurance provides cover for; a new building project, remodeling, restructuring, and installation of permanent fixtures. The policy includes coverage for:

  • Natural disasters

8% of all water damage can be attributed to weather. Builder’s Risk Insurance for homeowners covers damages caused by wind, floods or hail among others.

For example: An overnight storm could destroy your foundations. Your insurance agent will compensate you for the material and labor costs incurred during building.

  • Theft and vandalism

Theft of fixtures and materials within a construction site is common. Insurance compensates for stolen materials and reimburse you for damages.

For example: Vandals break into your construction site and rip apart the electronic wiring you had done during the day.

  • Builder’s Risk Insurance for homeowners covers fire damage

Many chemicals and materials used in construction are flammable. Repairing fire damage can set you back financially.

Let’s say some roofing materials catch fire and burn down the roof causing it to cave in.  You’re covered with your Builder’s Risk Insurance for homeowners.

Additional coverage

In addition to the above, your coverage can include some policy extensions such as:

  • Debris removal and contamination clean up.
  • Changes in building ordinance or Law.
  • Profit and overhead costs loss.
  • Loss during transportation.

Homeowner Insurance

Homeowner insurance is inadequate coverage for a building under construction. This includes a new building or renovations to an existing building.

However, this coverage is great for the homeowner.  It provides the following benefits:

  • Financial relief

Homeowner’s Insurance will safeguard your property from hazards such as:

  • Vandalism.
  • Fire.
  • Severe weather.
  • Theft of property.

Your Homeowners Insurance will pay for repairs and replacement costs. It also covers valuables such as jewelry. So, if thieves steal all your electronics, your policy will replace your stolen property.

  • Fulfill lender requirements

Lenders often insist that property be insured in case of fire, vandalism or severe weather.

For instance, if you have taken a loan against your house, the lender requires that your house is in top shape. Sadly, after a big storm there is flooding that causes water damage. Your policy will cover you for repairs.

  • Easy recovery

Homeowners Insurance pay-outs allow families to make repairs or replace property quickly. It reduces stress and allows you to get back to your normal life. Your policy also covers temporary living arrangements for the homeowner if your home is uninhabitable. For example, if a fire burns down the house, and you have to stay at a hotel during renovation.

  • Protects from liability

While you strive to make your home as safe as you can, accidents still occur from time to time. If someone gets injured on your property, they can hold you liable. Let’s say a neighbor slips and falls on your deck. Your Homeowners Insurance will cover all the medical bills, legal fees and lost wages.

Builder’s Risk Insurance for homeowners is just a call away

As you can see, each policy plays a specific role. Builder’s Risk Insurance for homeowners is great if you are making changes to your property. Homeowners Insurance will protect you from any financial burden to already constructed property.

Now that you understand the differences between the two you need an insurer you can trust. To get in touch with Contractors Liability call 888-819-1228. We are here to help.

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.