Protect Your Construction Project with Builders Risk Insurance
When real estate investors purchase properties for renovation, securing the right protection is essential. Builders Risk Insurance, also known as Course of Construction Insurance, provides comprehensive coverage for residential and commercial properties undergoing construction or renovation. This policy safeguards not only the structure itself but also building materials, equipment, and fixtures awaiting installation, protecting against risks such as fire, lightning, vandalism, hail, and theft.
Who Needs Builders Risk Insurance?
Builders Risk Insurance is ideal for:
- Property Owners
- Home Flippers
- Developers
- Contractors
- Lenders
- Architects
These policies are tailored to the unique needs of each project, whether it’s a remodel, new construction, or material and equipment installation. Policies can be issued under the investor’s name, with contractors added as additional insureds if they have an insurable interest in the property.
Determining the Right Coverage
To ensure adequate protection, coverage amounts are typically calculated by:
- Assessing the property’s reconstruction value
- Adding renovation costs
- Including materials, supplies, and on-site equipment
Builders Risk policies can also include:
- Rental Income Protection – Covers lost rental income due to covered property damage.
- Compensation for Lost Sales – Protects against financial losses from project delays.
- Lienholder Interests – Satisfies lender requirements.
- Tax Coverage – Covers property taxes if construction is delayed due to a covered loss.
Important Considerations When Shopping
While Builders Risk Insurance covers property and materials, it does not cover workplace injuries. Contractors should carry Workers’ Compensation Insurance to protect against job-related injuries.
Additionally, Premises Liability Insurance is recommended to protect against third-party claims, such as injuries sustained by visitors on the property. This coverage helps with medical expenses, legal defense, and settlements if a lawsuit arises.
Loss of Income Protection
Standard Builders Risk policies do not cover income loss due to construction delays. However, this protection can be added to safeguard against lost rental income from covered property damage—particularly if a rental contract is in place.
Policy Duration & Extensions
Builders Risk policies typically last 6 to 12 months. However, delays caused by weather, permit issues, or other unforeseen circumstances may require an extension. If needed, the insured should promptly request an extension from their insurance carrier.
Coverage After Construction
Once construction is complete, Builders Risk coverage terminates. If the property remains vacant or is awaiting sale, Vacant Property Insurance should be considered to maintain protection until the next steps are determined.
We’re here to help with your insurance needs! Our team is licensed in Colorado, Wyoming, Nebraska, and Arizona. Contact us today for expert guidance on securing the right coverage for your investment.