What is Builder’s Risk Insurance?

Otherwise known as course of construction insurance, builder’s risk insurance covers a contractor’s property, equipment and materials relating to a building or project under construction. This type of insurance can be used to protect a variety of investments from completely new structures being built from the ground up, to the renovation of existing buildings.

If you’re an independent contractor, or owner of a construction business, builder’s risk insurance is vital for not only safeguarding your business, but also providing you invaluable piece of mind when you’re on the job. Keep reading to learn more about the basics of builder’s risk insurance and how it can protect your construction business.

What Is Covered Under Builder’s Risk Insurance?

It goes without saying that all builder’s risk policies will vary depending on a variety of factors, but generally speaking, most policies will cover damages to property resulting from:

• Theft
• Vandalism
• Fire or explosion
• Lightning
• Hail
• Aircraft or vehicle collision

Other weather-related damages resulting from floods, earthquakes and wind may be covered as well but usually include a higher deductible; or via a coverage extension or endorsement. This type of protection is more important for construction projects that are located in areas with more extreme weather conditions. Be aware though that a standard builder’s risk insurance policy typically doesn’t cover the following:

• Employee or internal theft
• Mechanical breakdowns
• Voluntary partings
• Contractual penalties
• War and terrorism
• Fault or poor design, materials, workmanship or planning

We would always recommend working with an insurance broker with experience in providing builder’s risk insurance or construction insurance, as the complexities for providing this type of insurance are high. The last thing you want is for an accident to happen on your construction site and, for some reason or another, you aren’t covered!

How Much Does Builder’s Risk Insurance Cost?

Again, the cost for any builder’s risk insurance policy will vary depending on how much is covered and whether the policyholder has chosen higher deductible options and/or endorsements. However, most policies cost between 1-4% of the total construction cost. The total budget of your building project should be a good source for determining the appropriate coverage limit.

Builder’s Risk Insurance Vs. Contractors General Liability Insurance

A lot of times, people are confused about the differences between these two insurance policies. On the surface, these two coverages appear quite similar. However, they play very different but vital roles. Builder’s risk insurance covers the contractor’s equipment and property during construction. Contractors general liability insurance covers bodily injury, property damage and any resulting liability that could arise from possible accidents. It also protects contractors if they’re accused of causing property damage or injury.

If you’re interested in starting your own building company, or perhaps you’re looking to start on a new construction project, then you need an insurance policy that will cover any unexpected problems. Dunham Insurance Services is an independent agent offering the best insurance policies throughout Florida and the rest of the country. As an independent insurance agency, they place your policy with the company offering the best coverage at a competitive price. Contact them today to get a quote on a builder’s risk insurance policy perfectly tailored to your needs!