Builders Risk Insurance
While builder’s risk insurance is not usually required by law, many clients will not allow you to start a project without it.
Having builder’s risk insurance shows your clients that you are committed to taking care of the property while under construction. Furthermore, it shows that you can hold yourself accountable for any losses that might occur during construction.
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What Is Builders Risk Insurance?
Builders risk insurance is a policy for contractors which covers material that are typically excluded from General liability policies, including equipment and tools. It is also a type of construction insurance, as it covers damage to the portion of the project that is already completed while the construction project is in progress.
Many small businesses and independent contractors seek bundle packages for general liability, builder’s risk, and Workers Compensation insurance for sufficient coverage.
While this might not be the most appropriate solution for every contracting company, you can discuss this possibility with your insurance provider.
Builder’s risk insurance is also known as course of construction insurance.
Get Your Free Builder’s Risk Insurance Quote Below:
The rates below do not include wind insurance for buildings within 50 miles of the coast. If your property is within 50 miles of the coast, please submit and we will email you correct prices.
Builders Risk Insurance Cost
Unlike other goods and services, insurance policy rates vary due to many factors, and the builder’s risk insurance cost is no different. Insurance companies analyze many qualities of your company to quote how much the insurance will cost your company accurately.
The following are considered when calculating the cost of your policy:
- The age of your company.
- Your company’s reputation.
- Your company’s insurance track record.
- The type of company.
- Where your company is located.
Builders Risk Insurance Rates And Coverage
This table displays Typical Cost For Various Projects and Locations
| State | Amount of Coverage | Policy Premium | Policy Term |
|---|---|---|---|
| FL | $3000000 | $6480 | 1 Year |
| NC | $2200000 | $4928 | 1 Year |
| TX | $1700000 | $3124 | 1 Year |
| CA | $1700000 | $2414 | 1 Year |
| CA | $1500000 | $3570 | 1 Year |
| CO | $1450000 | $8686 | 1 Year |
| NJ | $1000000 | $3460 | 1 Year |
| VA | $879000 | $5274 | 1 Year |
| MN | $860000 | $2335 | 6 Months |
| CA | $650000 | $1005 | 6 Months |
| IL | $595000 | $595000 | 6 Months |
| MA | $570000 | $958 | 1 Year |
| MN | $490000 | $1813 | 6 Months |
| NJ | $400000 | $2310 | 1 Year |
| TX | $400000 | $1272 | 1 Year |
| MN | $300000 | $1440 | 1 Year |
| GA | $280000 | $1120 | 1 Year |
| CA | $720000 | $3240 | 1 Year |
| NC | $600000 | $1104 | 1 Year |
| TN | $30000 | $375 | 1 Year |
| RI | $300000 | $1050 | 6 Months |
| AL | $200000 | $600 | 1 Year |
| NY | $225000 | $601 | 6 Months |
| TN | $215000 | $430 | 4 Months |
| IL | $160000 | $653 | 6 Months |
Annual premium above includes unlimited certificates of insurance.
Rating assumes 150,000 gross revenues for Builders Risk/general contracting with 10% subcontractor costs.
Premium are subject to underwriting approval and financing charges may apply.
What Does Builders Risk Insurance Cover?
Builder’s risk insurance policy varies widely from one insurance company to another. It is advised to read the insurer’s quote carefully to ensure you get the right coverage for your business. Typically, this insurance policy covers construction contract sites from being damaged by:
- Floods
- Fire
- Winds: Construction insurance covers property damage caused by rainstorms, windstorms, hailstorms, and similar incidents when the construction is in progress.
- Vandalism: Construction materials such as building tools, heavy machinery, expensive copper wire gauge, and other items are costly and can be stolen from the construction site during construction. Builder’s Risk insurance covers you when the construction project is the victim of vandalism or other antisocial practices. This type of insurance protects from not only vandalism but also theft attempts.
- Similar incidents
The policy includes terms and covers materials debarred from general liabilities insurance. It provides extensive protection from storms and other weather damage, such as floods and hurricanes. However, internal water damage is an exclusion as it may be a case of gross negligence.
Insurance brokers usually advise small businesses to invest comprehensively in a Builder’s Risk, Workers’ Compensation, and General Liability policy bundle to avail the maximum coverage.
A builders’ risk insurance policy is specialized coverage, meaning that only certain types of construction and renovation projects are covered. The insurance covers the following:
- Installation of permanent fixtures, such as plumbing, electricity, and solar panels.
- New construction of a building or structure.
- Remodeling of interior fixtures in a home or other building.
- Restructuring, such as removing load-bearing walls, adding a new staircase, or reinforcing a building’s foundation.
Exclusions in Builder’s Risk Insurance
Although all the parties sharing the common interest of protecting the construction project must be named as insured on the certificate of insurance, certain parties, such as employees, are excluded.
The types of damages that are not insured in the builder’s risk insurance include:
- Water damage: When the Loss is due to the improper fitting of wires, resulting in leakages in the newly developed building.
- Employee theft: When employees working at the construction site are deemed responsible for stealing construction articles.
- Defects from workmanship flaws: When the defect in the already-built portion of the construction project is due to the negligence of the craftsman.
- Intentional damage: When there is a risk of deliberate damage, such as stealing or breaking construction material.
Who Needs Builders Risk Insurance?
Builders’ risk coverage includes everyone with something to lose on the construction project, be it a construction company, independent contractor, subcontractor, property owner, or small vendor.
All parties must be named insured on the policy and issued in the insurance certificate. Ensure that all the parties involved in the construction business or that have invested in the project are covered against bodily injury and commercial property damage during the course of construction.
Below are some of the professions that may need builder’s risk insurance, as well as some examples of what their coverage might include.
| Type of Business | What might be included in their Builder’s Risk Policy | What is not covered |
|---|---|---|
| Builders | Stolen tools, stolen equipment, stolen fixtures from a property in construction, and vandalism. | Loss is not covered as a direct result of criminal activities within the business, nor is normal wear and tear of equipment, mechanical failure, acts of war, or acts of nature (such as earthquakes, landslides, etc.). |
| Contractors | Vandalism, stolen tools, equipment, or fixtures from a property in construction are included. | Loss as a direct result of criminal activities within the business, normal wear and tear of equipment, mechanical failure, acts of war, and acts of nature (such as earthquakes, landslides, etc.) are excluded. |
| Developers | Objects or equipment that was present before starting work with a contractor, stolen fixtures from a property in construction, vandalism. | Any loss that isn’t accidental, loss as a direct result of criminal activities within the business, normal wear and tear of equipment, mechanical failure, acts of war, or acts of nature (such as an earthquake, landslide, etc.). |
| Home or Property Owners | Any household items and equipment (like garages, lawnmowers, etc.) that were not present before starting work with a contractor, damage to property, stolen items, or vandalism. | Any intentional damage or criminal activity on the homeowner’s part, normal wear and tear of equipment, mechanical failure, acts of war, or acts of nature (such as earthquakes, landslides, etc.). |
| Retail Companies | Ensures that the property is covered during construction and covers many of the things that other companies cover. This is especially important if you are renting or leasing a building. | It excludes any intentional or criminal activity on the homeowner’s part, normal wear and tear of equipment, mechanical failure, acts of war, or acts of nature (such as earthquakes, landslides, etc.). |
Who Pays for Builder’s Risk Insurance
General Contractors
GCs are one of the two parties who pay for builders’ risk policies before the beginning of the construction project. The general contractors are responsible for handling builders’ risk policy and paying for deductibles as and when required. Although both the building owner and the general contractor are responsible for their share of responsibilities, the risk share of the general contractor is the largest of all parties on the builder’s risk insurance. It handles everything from building budget reports to managing subcontractors to handling payments.Project Owners
Like general contractors, the project owner is also very interested in protecting the construction project from any internal or external dangers. A lack of insurable interest can raise the risks of financial loss as the project owner will have to bear the gross liability. The project owner partners with the general contractor to pay for business insurance and gets overall coverage to protect the property against loss. If the general contractor has not purchased the policy, the project owner is deemed liable for buying the policy.Subcontractors
Subcontractors may hold little insurable interest, but they must be included as insured in the builder’s risk policy. Suppose the completed construction portion on the construction site is damaged for any reason mentioned above. In that case, the subcontractors—including HVAC professionals, electricians, plumbers, and pipefitters—will be among the first few people to be called upon. Builders’ risk insurance can cover damage or any financial loss in cases of an accident resulting in physical injury or property damage. It will also include wage compensation, medical fees, and other relevant expenses that the property owner or the contractors will otherwise pay from their pocket.Property Owners
Needless to say, property owners will have a massive share of interest in protecting the property in the event of fire, floods, rainfalls, and hailstorms, to name a few. Sometimes the responsibilities and the role of property owners are the same as project owners, while sometimes not. Homeowners are the property owners when the project is within a residential area. They are liable to purchase a builder’s risk insurance policy when the contractor or the project owner has not purchased one. The homeowners are responsible for taking the most significant risk and thus need the largest share of the builders’ risk policy.
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Frequently Asked Questions (FAQ)
The following are common questions about Builder Risk Insurance.
Almost all insurance policies have a set of terms to adhere to, but with builder’s risk insurance, there are additional requirements that the purchaser must meet:
- Generally, the purchaser must have two years of experience in construction and an insurable interest in the building.
- The project is either just beginning or less than 30% complete.
- Basic information about the project was provided to the insurance agency.
In general, there are three different types of policies that most contractors go for. These include a 1-shot 6-month policy, a 1-shot 9-month policy, and a 1-shot 1-year policy. Additionally, some insurance providers will work out a custom policy expiration date, depending on the type of project that needs to get done.
The policies are in effect until one or more requirements are fulfilled: The insured no longer has any financial interest in the property, the property is accepted as complete by the purchaser, the project is abandoned with no intent of being completed, or the insured building is put to its intended use.
We prioritize you; we are not looking just to find you a policy. We consider every factor and work with only A-list insurance companies to provide you with the coverage that works for your company. When you work with Contractors Insurance, you get:
- A 5-minute quote that is custom-tailored to your business.
- Licensed insurance agents ready to find the best service for you.
- Help whenever you need it.
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