What is it?
A property insurance policy that is designed to cover property in the course of construction. Coverage is usually written on an all risks basis and typically applies not only to property at the construction site, but also to property at off-site storage locations and in transit. Builders risk insurance can be written on either a completed value or a reporting form basis; in either case, the estimated completed value of the project is used as the limit of insurance.
Options to consider:
- Property Coverage: Includes construction material, heavy machinery and equipment, temporary structures, cribbing, false work, fencing, scaffolding, construction signs and landscaping.
- Theft: Some builders risk insurance policies will cover theft of building materials; to get this coverage, you may need to have a gated job site. Ask your agent to quote this option if desired (not always included in every companies policy as a standard coverage).
- Labor costs and earned profits: Replaces labor costs, income, and expenses.
- Other damages: Negligent workmanship, flawed materials or design.
Common exclusions to be aware of:
Note that these policies do not cover accidents and injuries at the workplace or liability risks. They will also exclude certain acts of nature, such as earthquakes and floods. Typically you can buy flood insurance and earthquake insurance separately if these are exposures you are concerned with.
- Normally these policies are based on three, six or twelve month periods for the completion of the projects. If you know your project is going to last beyond the length of your policy extensions might be a possibility, simply call your agent and check your options.
- Costs for these policies are typically around one to three percent of the value of the project depending on the exact coverage and insurance carrier.
- Definitions and statistics from Trusted Choice