The Importance of Builder’s Risk Insurance Coverage

Builder’s Risk Insurance is a unique kind of property coverage. It covers a building where the building or insured area is presently being constructed. It can cover just the structure, or also the materials on site where installation or transportation to the job site is pending. This is a type of insurance that most owners will want every contractor to carry.

The policy will pay for damages up to the coverage limit. The limit must accurately reflect the total completed value of the structure (all materials and labor costs, excluding land value). The construction budget is the best way to determine the appropriate limit of insurance. Builder’s Risk insurance policies can typically be written in terms of three months, six months, or 12 months. If the project is not completed by the end of the initial policy term, an extension may be offered, but usually only one time.

The Power of Coverage  

The builder’s risk policy will provide coverage for damage done to the insured structure for quite a wide variety of unfortunate scenarios. Damage from the following events will be protected under most policies:

  • Fire
  • Wind (may be limited in coastal areas)
  • Theft
  • Lightning
  • Hail
  • Explosion
  • Vandalism
  • Vehicles/Aircraft

It is important for clients to read their builder’s risk insurance policy to be familiar with its limitations and exclusions. 

The Ins and Outs 

The cost of this policy will be in the range of one to four percent of the construction cost, but it will depend on the type of coverage and exclusions that the policy will have. The importance of having a solid insurance company is that they will expedite the claims and will help solve any potential claims during the construction process. Depending on the case, one may even be able to get assistance with the soft costs of the project, however, they will need to inquire upon this to include it in the coverage but clients must be aware that these types of additions are likely to increase the cost of the builder’s risk.

The builder’s risk insurance is part of your client’s project’s soft costs, and even though it will cost them some money, it is certainly better to have it than not having it when is needed. For specific terms, coverage, and exclusions, the builder’s risk insurance policy should determine the applicable coverage specific to their unique protection needs. 

About AmSuisse

Formed in 2013, AmSuisse, Inc. has quickly distinguished itself as a wholesale operation that specializes in working very closely with our agents and broker partners to develop responsive, individualized service for each client. Our unparalleled writing support, industry-specific expertise, marketing support, responsive proposals and quotes, strong customer service, and strong relationships with our carrier partners have all helped us to provide the best possible coverage for our clients. To learn more about our available coverage, contact us today at (800) 485-0229 to speak with one of our representatives.