Builders Risk Insurance Explained

Builders Risk Insurance Explained

Builders Risk Insurance, which sometimes referred to as Course of Construction or Inland Marine Coverage, is a special type of property insurance. It is designed to cover a building that is currently under construction. Its coverage can be just for the building, or with other materials meant to be used for the construction; either at the construction site or at off-site storage locations and in transit.

Builders risk insurance policy can be purchased for either residential or commercial building project. The definitions of “residential” or “commercial” however, varies among the policy providers. For instance, some insurance companies may define a residential building as a family home for 1 to 4 numbers of occupants.  A commercial project could be anything from the shopping complex, office buildings, and sports arena. The policy is usually provided for three kinds of construction projects, namely:

–          Ground-up new construction;

–          Remodelling; and

–          Installation

How Does Builders Risk Insurance Work?

Just like every other insurance type, the builders risk insurance risk policy is a risk management financial plan, which pays for damages up to the coverage limit. The policy term could be for 3months, 6months, or 12 months, depending on the size of the project. In the event that the project isn’t completed when the policy expires, you can negotiate with your policy provider for an extension.

What Does Builders Risk Insurance Cover?

Damages from events such as fire, wind, explosion, vandalism, hail vehicles, are often covered by the policy. In some cases, limited coverage may be made available for building collapse. Comprehensive coverage may also include damages from events like earthquake, war, weather to property, mechanical breakdown, flood, and theft.

Keep in mind, however, that liabilities from injuries and accidents, and professional liability are excluded from the coverage. You may get stand-alone liability insurance for this purpose. Also, if you have subcontractors working on the same project, they will need to get their own insurance separately. The policy coverage is restricted to the building it is purchased for, and will not cover property belonging to other people.

Who Needs Builders Risk Insurance?

Builders risk is a crucial insurance policy that is essential for those who are into building construction. Having it will significantly help in averting potential financial loss from common damages in building construction. It will also help protect your reputation as a builder. You will most likely need builders risk insurance if you are a:



Homeowner or property owner

Development or investment company owner

House flipper

How Much Builders Risk Insurance Do I Need?

There’s no one-cap-fits-all to this. The budget for the building will determine how much policy you will need.   Generally, builders risk insurance price ranges from 1% to 4% of the total construction cost. The exact policy amount will depend on the number or the kinds of items you want the policy to cover. While you will want to be prudent with your budget, it is essential not to leave out crucial aspects, including soft costs of the project. This will guarantee adequate coverage when the need arises. When shopping for a builders risk insurance policy, do ensure that you patronize a reputable insurance company that will guarantee a prompt response to your claims.

In order to receive a quote on builder’s risk insurance, please click on the following link:

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