Builder’s Risk Insurance
Bowles & Associates, Inc has competitive rates for Builder’s Risk Insurance.
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What is Builder’s Risk Insurance?
Builder’s Risk Insurance, also known as Course of Construction Insurance, is a form of property insurance that covers a building or structure under construction or renovation as well as the materials, fixtures and equipment being used in the construction or renovation of the building or structure. Builder’s Risk Insurance can be written to cover just the building or structure, or also the materials on site waiting to be installed or transported to the job site or even the equipment being used at the job site.
A Builder’s Risk Insurance policy will pay for damages to property, materials, fixtures and equipment included in the policy up to the covered limits. The covered limits for a building or structure must accurately reflect the total completed value of the structure including all materials and labor costs, but not including land value. The construction budget is the best source for determining the appropriate limit of insurance coverage.
Builder’s Risk insurance policies are usually written for three month, six month or twelve month periods. If the project is not completed by the end of the initial policy term, it can usually be extended, but usually only one time. Coverage should begin prior to when the first materials are delivered to the job site and typically ends at the closing of the sale, occupancy or the policy expiration date. Once coverage under the builder’s risk insurance ends, the property owner should have permanent property insurance in effect such as a homeowner’s policy or a commercial property policy.
What perils are covered by Builder’s Risk Insurance?
As every contractor knows, buildings under construction or renovation are particularly vulnerable to losses. Buildings in an uncompleted state are inviting to intruders especially when unoccupied. Uncompleted buildings are also more vulnerable to forces of nature than completed structures.
Builder’s Risk Insurance can cover a multitude of perils that can result in damage or loss to property under construction. The most commonly included are fire, high winds, lightning, hail, theft, vandalism, explosions and damage from vehicles or aircraft. The builder’s risk insurance policy will also pay your expenses to remove debris from covered property if the debris results from a loss that is covered under the policy. Extensions of coverage may be provided for certain situations including scaffolding, property in transit, and property in temporary storage.
What perils are not covered?
Flood damage or wind damage in beach zones are not usually covered unless specifically included in the policy. (Water damage from the backup of sewers and drains is usually covered). Damage from earthquakes are also not typically covered in Builder’s Risk Insurance. Earthquake riders can be very economical depending on where your project is located but are not usually a concern in the New Orleans area or in Louisiana. However, a rider for flood damage should be considered for any Builder’s Risk Insurance policies issued in the New Orleans area or just about anywhere in Louisiana!
Accidents and injuries at the workplace are not covered by Builder’s Risk Insurance. Other situations that are not covered by Builder’s Risk Insurance are: weather damage to property in the open, war, government action, contract penalty, voluntary parting, mechanical breakdown and damage resulting from faulty design, planning, workmanship or materials.
Who should buy Builder’s Risk Insurance?
Custom homebuilders, general contractors and even property owners can purchase Builder’s Risk Insurance to protect personal or business projects under construction. Builder’s Risk Insurance coverage may be necessary to show proof of insurance to comply with local city, county and state building codes. Builder’s Risk Insurance is often required as a condition to many contracts.
Although Builder’s Risk Insurance can be purchased by the contractor, it is often safer for the property owner to obtain the builder’s risk policy. The property owner already owns the building, even while it is under construction, so if damage to the building occurs, they should be the beneficiary and control how the payment from a claim is spent.
Our Builders Risk Insurance policies are designed to meet the needs of residential and commercial customers for any construction project type and size. If you are a property owner or contractor preparing to begin a new construction or renovation project in the New Orleans area, contact us for a free consultation regarding your insurance coverage. The business insurance specialists at Bowles & Associates, Inc. can help ensure the proper coverage and limits of a Builders Risk Insurance policy are in place for your construction project.