Protecting Your Construction Project with Builders Risk Insurance

When real estate investors acquire new properties for renovation, ensuring adequate protection is crucial.

Builders Risk Insurance, also known as Course of Construction insurance, offers comprehensive coverage for residential or commercial properties undergoing construction or renovation. This policy not only covers the property itself but also building materials, equipment, and fixtures awaiting installation, safeguarding against various perils such as fire, lightning, vandalism, hail, and theft.

Who Needs Builders Risk Insurance?
1. Property Owners
2. Home Flippers
3. Developers
4. Contractors
5. Lenders
6. Architects

Builders Risk policies are tailored to the specific needs of each renovation project, covering remodels, new builds, and the installation of building materials and equipment. These policies can be issued under the investor's name, with the contractor often added as an additional insured, provided they have an insurable interest in the property.

Determining Coverage Amounts
The process for determining the appropriate coverage typically involves:
* Assessing the building or structure's reconstruction value
* Adding renovation costs
*Including materials, supplies, and on-site equipment

Additional Coverages
Builders Risk policies can include additional coverages such as:
*Rental income protection
*Compensation for lost sales
*Lienholder interests as required by banks
*Tax coverage

Considerations When Shopping
While Builders Risk Insurance offers vital protection for property and materials, it's crucial to understand that it does not extend coverage to workplace injuries. In such cases, the contractor's and worker's compensation policy would provide the necessary coverage for work-related injuries.

Moreover, consider adding Premises Liability coverage to safeguard against third-party claims. This type of coverage addresses medical claims stemming from the property owner's negligence, providing support for defense and settlement proceedings in the event of lawsuits.

Loss of Income Protection
Builders’ Risk policies typically don't cover loss of income resulting from project delays. However, this coverage can be added upon request to protect against income loss due to covered property losses, particularly if there's an existing rental contract in place.

Policy Duration and Extensions
Builders Risk policies are available for varying durations, ranging from six months to one year. However, unforeseen delays such as weather or permit issues may necessitate an extension. In such cases, the insured should promptly request an extension from the insurance carrier.

Conclusion and Additional Coverage
Remember, Builders Risk policies terminate upon project completion. For properties without tenants or undergoing renovation, consider obtaining Vacant Insurance coverage until a decision is made regarding
renovation or sale of the property.

For more information or assistance with insurance needs, please don't hesitate to contact us. We are
licensed in Colorado, Wyoming, Nebraska and Arizona.