Builders Risk seems like a pretty self-explanatory coverage term – but is it? These policy don’t actually coverage the builder themselves, per se, but rather some of their insurable interests. For example, materials such as lumber and drywall, fixtures such as faucets and sinks, and equipment such as alarms or wiring, may be covered on a Builders risk policy while they are awaiting installation. However, there are various policies and provisions for this type of coverage – and your agent should be helping you understand what yours will and won’t cover.
Who Needs It?
Obviously, a “builder” is the most common insured for these policies, but others and eligible and may actually need the coverage. Contractors, house “flippers”, developers, retailers, and school districts are among those who may have an insurable interest in the materials for their projects. But one group that may not be considering this coverage, even though they are usually eligible for it, is home and property owners. Why? You have an insurable interest in the project, and a typical homeowners policy doesn’t cover projects under construction. Some policies may offer a supplemental builders risk policy that can be added to your homeowners coverage – but not all.
What Type of Projects are Eligible?
Another important thing to keep in mind is that this isn’t just a coverage for new construction. Remodeling and installation projects are also opening up risks that may be covered under Builders Risk. Just imagine you’re having new windows installed, and someone vandalizes them while they’re set up outside your house and waiting for the installers to complete them. In that situation, whose policy would pay? The window retailer? The delivery company? The installation company? Or maybe, none of the above. Many factors are involved that could leave you with a gap in coverage unless the right policie(s) are in place.
What Are the Policy Variables?
Loss and damage on construction sites are obviously the focus here, and there may or may not be coverage for theft, vandalism, flood, windstorm, earthquake, ordinance & law, and business income. These are not typically liability policies, although stand-alone liability policies may be available for those risks. The property that is covered may also vary, and that’s why it’s critical to understand what materials you have an insurable interest in – and whether or not they’ll covered. For example, if you’re a landscaper installing rolls of sod, but your policy only covers your equipment, what happens when the sod gets stolen?
Not sure if you need Builders Risk? Have a policy, but not sure it’s the right one? Let us help you figure it out and determine what’s best for your coverage needs. Call 865.453.1414 and let’s discuss it.