What Is Builders Risk Insurance?
Builders risk insurance, also called "course of construction," insurance is a type of property coverage for buildings under construction, as well as all of the materials and equipment used in the project. You will typically need to purchase coverage for 100 percent of the anticipated construction costs.
The coverage can be especially important if you are working with materials that are prone to damage, or if you are working in an area that is prone to certain types of severe weather. It is also important coverage that protects your investment from unforeseen risks. Be sure to work with a knowledgeable commercial insurance agent when choosing the type and amount of builders risk coverage you need.
What Builders Risk Insurance Covers
Your builders risk insurance policy can be structured to cover the following:
Property damage: Includes construction material, heavy machinery and equipment, temporary structures, cribbing, false work, fencing, scaffolding, construction signs and landscaping
Theft: Some builders risk insurance policies will cover theft of building materials; to get this coverage, you may need to have a gated job site
Labor costs and earned profits: Replaces labor costs, income and expenses
Perils of nature and man-made disasters: Hurricanes, fires, blizzards, severe hail storms, lightning, black outs, broken water mains
Other damages: Negligent workmanship, flawed materials or design
Some coverage will be part of a basic policy and other items will need to be added on. It is important that you work through the details of a policy beforehand. An agent can help you create a policy customized to the project you are working on. Independent agents can give you access to multiple companies and policies and direct you to the companies who are strong in the areas you are most concerned about insuring.
What Is Excluded from a Builders Risk Insurance Policy?
Note that these policies do not cover accidents and injuries at the workplace or liability risks. They will also exclude certain acts of nature, such as earthquakes and floods.
Typically you can buy flood insurance and earthquake insurance separately. Be sure to work with an agent who will help assess your risks and can review your coverage carefully.