If you are considering a residential construction project, you are more than likely aware insurance will be a major consideration. Part of the process is to make sure your contractor has all the proper insurance coverage. But what about the things that are not covered by their insurance? This is where risk insurance comes into play. In its simplest terms, risk insurance will provide coverage for losses that are not insured by the general contractor coverage or standard insurance policies.
What is Builders Risk Insurance?
This is another insurance that will be needed during the construction process. It helps cover losses that are not generally covered. These losses would include such instances as:
Either party can purchase the insurance, meaning the builder or project owner. If purchased by the owner, the builder can generally be added as someone that is additionally insured by the policy.
Exclusions from this type of insurance would include instances of:
- Employee theft
- Equipment breakdowns
- Normal wear and tear of equipment
- Acts of war
- Water damage
- Liability issues
Coverage can be provided for:
- New construction
- Installation projects
For these projects, the coverage will provide for all materials, supplies, and equipment. This will often cover those items while being secured in another location, in transit, or on the construction site.
In addition to the standard coverage, you can secure additional coverage for items such as:
- Inclusion of debris removal for any covered loss
- Loss of valuable papers, such as the construction plans
It is important to note that not all losses that you may think fall into these coverage areas are, in fact, covered. For instance, the tools of workers would not be covered under theft coverage if they were stolen or damaged. Additionally, any losses suffered AFTER the completion of the project are not covered by this insurance.
When deciding on the amount of coverage, ideally, it would cover the total value of the project. As we have seen during some of these recent storms, a hurricane can be devastating, resulting in complete loss of everything. With the cost of this insurance, there is no need to panic, as policies typically cost about one to two percent of the overall value of the project.
If you are unsure about what is needed or overwhelmed by the overall scope of building a new home, we highly recommend you speak with our team about hiring a residential construction project manager. You consultation is free of charge and you are under no obligation to use our services just for talking to a member of our team. Give us a call today at 888-402-4180.