Construction projects are fun to see come together, but they also pose risks that a lot of us don’t think about until something goes wrong. Weather damage, pilfering of materials , and accidental fires can set a build back financially. This is when knowing what is builder’s risk insurance and how it applies to you as a contractor becomes crucial. It’s a specific kind of coverage aimed at safeguarding buildings under construction or repair.
Understanding Builder’s Risk Insurance
Builder’s risk insurance is a temporary policy for property and materials while they are under construction. This is a feature not found in commercial property insurance, where coverage starts once the building is complete and occupied. They are often used in new construction or significant renovation projects.
Many property owners who are researching their coverage choices through Summit Insurance find that conventional policies don’t kick in until a project is complete. That’s where builder’s risk insurance comes in.
What Does Builder’s Risk Insurance Cover?
The following are some common risks that are typically covered by builder’s risk insurance, although the specifics may differ in each policy:
- Fire and smoke damage
- Theft or vandalism of building materials
- Windstorms and certain weather events
- Damage to materials stored on-site or in transit
It’s worth noting that this coverage only pertains to the structure itself and not liability or any injuries to workers. Protect belongings, liability issues, and more with renters insurance!
Who Needs Builder’s Risk Insurance?
This type of insurance isn’t just for builders. It can apply to:
- Property owners
- Contractors and subcontractors
- Developers and investors
Anyone with a financial stake in a project may need the benefit of protection during construction. In growing territories such as British Columbia, numerous of the projects they help manage do so through builder's risk coverage to stay safe on the construction phase exposure through Summit Insurance Kelowna.
What Builder’s Risk Insurance Does Not Cover
Understanding limitations is just as important as knowing what’s included. Builder’s risk insurance usually does not cover:
- Employee injuries (handled by workers’ compensation)
- Design or workmanship errors
- Normal wear and tear
- Occupied or completed structures
Once a building is finished, a different type of property insurance becomes necessary.
Read more: Whats Tenant Insurance?
Why Understanding Builder’s Risk Insurance Matters
Delays in construction and surprise losses can throw a budget off course in short order. Having appropriate insurance in place for the building phase of a project helps to minimize financial uncertainty and allows projects to move forward with confidence.
Final Thoughts
Understanding what is builder’s risk insurance provides property owners and contractors with peace of mind when they need it most during the course of any job. It’s not a matter of selling coverage; it is understanding protection. Once construction is finished, the adequacy of coverage will vary, but throughout the build process, builder’s risk insurance is an important part of protecting what has been built. Also, learn the purpose, coverage options, and how to choose the right tenants insurance!
