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What Is Builders Risk Insurance and Why Do You Need It?

By March 19, 2017April 5th, 2023No Comments

Builder’s risk insurance provides financial protection over a building or other insured area that is currently under construction.

This customizable insurance policy, which is often called Course of Construction coverage, is usually a requirement for government projects and, construction projects paid for through a lender. It’s the type of investment necessary to protect the project itself from a variety of losses. Most property owners will require contractors to maintain this insurance.

What Is Builder’s Risk Insurance?

Is a type of insurance that covers a building or structure currently under construction. In some cases, it will only cover the building itself. In some cases, the materials onsite that will become a part of the structure will also be included.

This coverage is a type of financial protection contractors benefit from because it reduces the risk of loss should a covered event take place. The policy will usually be a short-term; available as three-month, six-month, or 12-month plans. They can also allow extensions for work not completed during the project.

This type of insurance policy pays for damage up to a specified limit. That limit will likely reflect the total completed value of the structure, including all labor and material costs. The cost of land is not a component in most policies.

What Does Builder’s Risk Insurance Cover?

Policies are customizable and specific to the project. Most policies are quite comprehensive, protecting from a variety of types of losses from various incidents. Most policies will cover:

  • Fires
  • Theft
  • Hail
  • Lightning damage
  • Wind-related damage
  • Vandalism
  • Vehicle and aircraft collisions
  • Explosions

Builder’s insurance can include earthquake and flood coverage if added on to the policy specifically if needed. Most policies only offer limited coverage for collapse.

Exclusions typical of builder’s insurance policies often include:

  • Earthquake-related damage
  • Water damage
  • Any type of weather damage to out-in-the-open property
  • Government action
  • Employee theft or related damage
  • Voluntary parting
  • Contract penalties
  • War or terrorism damage
  • Mechanical breakdowns

Most policies do not cover any equipment or tools. It also does not provide any level of liability insurance, any coverage for accidents on the job site, or any sub-contracted work.

Who Needs to Purchase Builder’s Risk Insurance?

The investment in builder’s risk insurance is ideal for any type of custom builder as well as any general contractor. In some cases, the property owner can also purchase this policy. Some city ordinances require proof of the purchase of this insurance prior to the start of any project.

What Does Builder’s Risk Insurance Cost?

The cost of builder’s risk insurance varies from project to project. But policies start at just $500. It’s essential to maintain a builder’s risk policy, because even a single accident during the construction project can be very costly.

Why Choose GRBM for Builder’s Risk Insurance?

For those building contractors in New York, builder’s risk insurance isn’t something to forgo. At GRBM Insurance, we provide comprehensive support specifically designed for your project’s needs.

Established in 1986, our family owned business is here to support you through any project, giving you the assurance that your business can weather any storm. Fully licensed in New York and Connecticut, GRBM Insurance has more than 30 years of experience providing our clients with exceptional service and competitive rates. We offer same day quotes to get you started.

 

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