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The Definitive Guide to the Builder’s Risk Insurance Policy

A Builder’s Risk Insurance Policy is an excellent way to protect your investment in your construction project.  Let’s talk about the key characteristics of a policy:

  1. What is it for?
  2. Who can get it?
  3. What coverage does it give you?
  4. How long is it valid?
  5. How much does it cost?

What is a Builder’s Risk Insurance Policy for?

This insurance is specially for roperty coverage. It covers particular types of building projects.  These are new buildings and the renovation or restructuring of existing ones.  In general, a policy protects the property, the equipment, materials and labor costs during construction.

Who can get it?

Anyone doing building work that falls into the above description can purchase a Builder’s Risk Insurance Policy .  This could be a developer, contractor, sub-contractor or homeowner. The policyholder must have two years of experience in their area of expertise.  One policy can cover all the participants in the project. When a loss event occurs, the mortgage or lien holder recieves the funds.  The money can be drawn from there when the repairs or replacement of property begins.

What coverage does it give you?

A Builder’s Risk Insurance Policy covers a range of loss events that occur in construction.  It is customized for your particular project and you include the coverage you need.  You don’t get a standard policy as such but there are many options that are included.  These include:

  • Fire
  • Theft
  • Vandalism
  • Adverse Weather
  • Protection of Documents and Plans
  • Removal of Debris
  • Decontamination of a site
  • Protection of profits
  • Building Ordinance changes
  • Temporary structures (such as scaffolding)
  • Soft Costs

Speak with our agents at Contractor’s Liability. They will include the coverage that you need and alert you to anything that your policy cannot include.

How long is a policy valid for?

The also call it Course of Construction Insurance because it covers the property during the construction process.  A policy is normally 3, 6 or 12 months in duration. If there are no claims against it, you can extend it.  It can be extended if there have been no claims against it.  when the work on the building is complete, and is ready for occupancy, you will need new coverage. such as homeowners insurance.

How much does a policy cost?

There are 3 factors that have a big influence on the cost of a policy.  These are:

  • The total value of the project. The policy must have a value of 100% of the replacement cost of the project at completion.
  • The location of the project.  Projects located at the coast or in tornado states carry additional risks such as flooding and wind damage.
  • The types of materials used. A wooden structure carries more risk; the quality of the finishes and materials will also impact costs.

In general a policy costs between 1 and 4% of the total project cost.

Get Your Builder’s Risk Insurance Policy today

Our agents at Contractors Liability can write up a policy for you today.  We have more than 20 years experience in the industry and represent A-Class insurance carriers. Call Contractors Liability on 866-225-1950 and get the right coverage at the lowest cost.

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.