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Construction Insurance is an essential tool for risk management in both commercial or residential projects. It enables you to transfer the risk of loss during different phases of construction from yourself to your insurance company. However, there are all sorts of risks associated with construction projects.  As a result, different types of coverage may be required by law or to win contracts.


Builder’s Risk insurance is one such coverage.  In this article, we will look at the benefits of Builder’s Risk to you as a contractor.


What Is Builder’s Risk Insurance?


Builder’s Risk insurance is a type of Construction Insurance. Moreover, it protects buildings and other structures while they are being built or remodelled. Your Builder’s Risk policy pays for damages up to the coverage limit. As such, this should match the estimated completed value of your project.


What Does Builder’s Risk Insurance Cover?


Most Builder’s Risk policies include coverage for building materials, foundations, fixtures, machinery and scaffolding. Consequently, your policy will also provide coverage for equipment used to service the building, such as elevators and HVAC or electrical systems. Furthermore, for causes of loss, most Builder’s Risk polices will insure against fire, explosion, theft, vandalism, wind (usually excluded in coastal areas), hail, lightning, and aircraft and vehicle collision.


What’s Not Covered By Builder’s Risk Insurance?


  • Landscaping
  • Fences
  • Signage
  • Underground drainage
  • Construction materials
  • Equipment in transit or temporary storage
  • Construction trailers


Additionally, Builder’s Risk policies do not usually offer coverage against natural disasters like earthquakes, floods, and landslides.


Other Standard Exclusions To Builder’s Risk
  • Acts of terrorism and war
  • Government seizure
  • Nuclear hazard
  • Employee theft
  • Mechanical breakdown
  • Loss or damage resulting from faulty design, planning, workmanship, and materials


Additional Coverage Extensions


Unless explicitly excluded or limited in the policy, you can purchase additional coverage for excluded causes of loss.  Consequently, some of the most common coverage extensions your insurance company may offer you at increased premiums include:


  • Debris removal
  • Contamination clean-up and removal
  • Electronic data and valuable documents like blueprints and site plans
  • Law or ordinance changes
  • Fire department service charges
  • Architectural and engineering fees incurred as a result of a covered loss
  • Contractual penalties


Benefits Of Builder’s Risk Insurance to Contractors


Unlike certain types of Construction Insurance, Builder’s Risk insurance is not compulsory. However, going without it can prove to be quite risky for these 3 reasons:


  1. Builder’s Risk protects your business from financial loss in the event of property damage or theft. If a house you were renovating burnt down, your Builder’s Risk insurance pays out for the material and labor costs incurred up to the time of the fire.
  2. It helps you win more contracts. Hence, property owners and developers are more likely to hire a contractor with coverage.
  3. It gives you peace of mind. Working as a contractor is a highly stressful job. Moreover, your role is to oversee all aspects of a project. Having coverage for property damage eases the burden significantly. As a result, this allows you to focus on growing your business.


Construction Insurance Experts


With 680,000 employers and over 7 million employees in the construction industry, carrying Construction Insurance can help you stand out from the competition. At Farmer Brown Insurance, we design policies specifically suited for your project. Therefore, to learn more about our Builder’s Risk coverage, contact our agents today  at (888) 973-0016 today.

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