What is Builders Risk Insurance?
Builder’s risk insurance tends to a critical need of every small and large construction company. When working on a site, contractors – and sub-contractors – are exposed to a major risk that could have devastating effects on their business: the risk of total loss of property on a site. While you may have guards looking after your property on an on-going site, they cannot protect it from damage due to harsh weather, and that is just one way having thorough cover for construction risk insurance can benefit you.
Builder’s risk insurance is purchased separately because it is not typically included in your business owners policy. This exclusion from the more streamlined commercial insurance is due to the temporary nature of exposure a contractor may have on any given site. Once a project is finished, the contractors involved move on to the next with all their property, which makes it unreasonable for them to get long-term insurance for their risks on the site.
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WHO NEEDS A BUILDER’S RISK INSURANCE POLICY?
A builder’s risk insurance policy is usually sought by construction companies and contractors. However, it is useful to all kinds of contractors and sub-contractors involved in any given construction project.This is because, for most of the parties involved on a site, leaving expensive machinery on-site is a cost-effective norm.
If you are a main contractor, or a sub-contractor whose team works on a construction site and must leave expensive machinery exposed to risks of significant and costly damages, you should immediately get builder’s risk insurance.
BUILDER’S RISK INSURANCECOVERAGE
Builder’s risk insurance coverage is a complex matter. However, the way this type of insurance coverage works is quite simple: The insurance policy is purchased by either the site owner or the contractor, which must include each insured party’s name. The policy then protects the named parties from any loss to property through natural or third-party acts.
Coverage for builder’s risk insurance is often calculated by taking into account multiple factors that include the type of construction involved, location of the site, and type of project. With our network of construction risk insurance carriers, you can get proper cover from common perils to your property on project sites.
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What Does Builder’s Risk Insurance Coverage Include?
Builder’s risk insurance coverage is a great solution for professionals and companies working in the construction business to work on any site with peace of mind and very little exposure to risks of damage to property while it is stored on a site.
This type of insurance coverage typically includes thorough cover from damages caused by natural and third-party actions. If some of your equipment on a site is damaged by an overnight rainstorm, a typical builder’s risk insurance policy will cover it. Similarly, if any of the equipment you left on a site is stolen or vandalized, you can expect your construction risk insurance carrier to compensate you for it.
Incidentally, extreme natural disasters, such as earthquakes, are not usually included in typical builder’s risk insurance.
COVER PROVIDED IN BUILDER’S RISK INSURANCE
The key types of covers you get in your builder’s risk insurance usually include the following:
- Fire caused by accident or started by a third party (Not including any members of your – or the site owner’s – staff)
- Theft or vandalism of property by a third party, as any damages caused to the property by your employees is not covered
- Lightning strikes, hailstorms, and some other natural disasters
- Crashing vehicles (overland and airborne)
Since builder’s risk insurance coverage is complex, it is important that you understand not all kinds of damage to property is covered in this type of insurance. We have already stated that damages caused by your employees is not covered in a typical builder’s risk insurance policy. Other possible causes of peril excluded from your builder’s risk insurance coverage may include:
- Certain natural or artificial disasters, such as earthquakes
- Any kind of flooding or damage caused by water
- Structure collapse for any reason other than those endorsed in the policy terms (where possible)
- Damage to uncovered property caused by extreme weather
- Mechanical faults and breakdowns of machinery
- Damage caused as a result of flawed design, poor planning, substandard materials, or unskilled work
- Any penalties that are included in your service contract
Speaking of exclusions, your builder’s risk insurance coverage will not have any contribution in certain other types of covers, such as workplace accidents that occur on site, your liabilities, equipment or tools, and damaged property that did not belong to any of the parties listed as insured in your builder’s risk insurance policy.
Request a quote for comprehensive builder’s risk insurance coverage from Ficke Insurance’s network of carriers now