You can find more than 3.7 million construction companies in this country. Each focuses on specific services, such as residential construction or commercial construction.
Construction companies provide essential services for people and businesses, but they also have risks. To reduce their risks, construction companies, as well as property owners, can purchase builders risk insurance.
Whether you own a construction company or are acting as the owner of the property, you will need this coverage and it will be usually be required by your mortgage company as well. This coverage protects your business and the risk location and materials against numerous risks, and you can’t operate without it.
The Risks That Properties under Construction Have
Construction companies include multiple types of businesses, and most have the same or similar risks during the course of a construction project.
For example, when a company or owner starts building a property, it takes months to complete it. During this time, numerous things can damage and alter the progress.
One of the most common perils to properties under construction is fire. A fire could start, causing the building to burn down. Wind or hail could also sweep through the area, forcing the structure to collapse. It’s important to note Hurricane Season runs from June 1st to November 30th every year in Florida.
Builders risk is a form of property insurance that protects the property and the project against covered perils, including these threats. It can also protect against theft, vandalism, explosions, and other acts of God.
When contractors and owners build structures, they must find ways to reduce the risks of these potential issues. The best solution is to purchase insurance. Builders risk is one of several insurance types that most construction firms and property owners need during the course of new construction and major remodeling projects.
Insurance is one of the only products that companies can purchase to minimize their risks, and builders risk is essential for protecting your investment.
The Basic Principles of Builders Risk Insurance
A builders risk policy covers numerous things. Here is a breakdown of some of the main principles of this type of insurance policy:
Damages From Perils
First, builders risk policies can cover property damages that result directly from perils. For example, if someone steals lumber from your job site, you could file a claim for this loss.
You can also file claims if your blueprints encounter damage or if a windstorm knocks down your structure. You can recoup the money you lost from tangible items as well as the work you put into the project.
Lost Sales or Expenses
Your policy can also covers the risks from lost sales or revenues due to covered perils. For example, if a storm caused damages that require rebuilding the structure, you can receive compensation for the lost revenues.
Additionally, the policy can cover extra expenses you encounter after the peril occurs.
Debris Cleanup
A builders risk policy might also provide coverage for debris cleanup.
For example, suppose a tornado destroyed a structure you were building. To fix it, you would have to start by removing all the debris. After that, you could rebuild it.
Additionally, it is vital to know that this insurance type doesn’t cover everything. You might need other insurance types for other purposes. Here are a few exclusions that might be included add-ons to your quote or policy or may require additional insurance policies:
Equipment Breakdowns or Vandalism
A builders risk plan doesn’t generally cover issues that occur to your equipment. For example, if your crane breaks down and causes disruptions to your project, your builders risk policy probably won’t cover the costs.
It also won’t cover the costs of vandalism that could happen to your equipment. You would need a different type of insurance for this continuous protection.
Liability Issues
Additionally, builders risk doesn’t usually provide liability insurance for your job sites. Instead, you should purchase general liability insurance.
Liability insurance is one of the most basic forms of coverage you can buy, yet it’s one of the most crucial types. For example, if people visit your job sites and get injured, your liability coverage can protect you.
Employee Injuries
Finally, your builders risk policy won’t cover employee injuries. Your business should have workers’ compensation insurance for this purpose. You may even need additional types, and a licensed agent can help you determine which types to get.
Who Needs It
Now that you understand the basic principles of builders risk, you might assume that companies only need it if they build things, such as homes or commercial buildings.
While these contractors need builders risk, they’re not the only ones. There are several other types of companies that need it. Here are a few:
Architects
An architectural firm creates and designs structures for people and businesses. They need builders risk to protect against design flaws that lead to damages or potential damage.
Subcontractors
Subcontractors perform specific tasks on structures. For example, plumbers design and install plumbing systems, requiring insurance protection for their services. The same is true for all other types of subcontractors.
House Flippers
Another type of business that needs builders risk insurance is house flipping companies. A company that flips homes also needs the protection of a builders risk policy to reduce their risks.
How It Works
Builders risk insurance is like other insurance types; you can customize the policy for your needs and risks. When you request a builders risk insurance quote, the agent will ask you some questions to determine your needs.
Here are some of the questions the agent might ask:
- What type of business do you have?
- How long have you been in business?
- What are your approximate gross revenues?
- What specific services do you offer?
- What risks do you want to cover?
- Is there anything that makes your company unique?
From there, an agent can calculate a quote for your coverage. Your policy costs depend on your risk level and coverage amounts.
How to Purchase a Policy
If you want to operate a construction company or are an individual seeking assistance in protecting your new construction or remodeling project, you need the correct protection. Purchasing builders risk insurance is one way to get the protection you need.
Are you interested in purchase a builders risk insurance policy? If so, contact Harris Insurance Office. You can call, text, or email us to learn more about our services and costs.
LEGAL DISCLAIMER
Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Discussion of insurance policy language is descriptive only. Every policy has different policy language. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. Please refer to your policy for the actual language.
